In investor-originated life insurance (IOLI), also known as stranger-originated life insurance (STOLI), investors or third parties stand to benefit when the insured individual dies. In these arrangements, investors initiate the purchase of a life insurance policy on the life of another person, often an elderly individual. The primary motive for investors is financial gain. Upon the death of the insured, investors receive the death benefit payout from the life insurance policy. The value of the death benefit serves as the return on the investment made by the third party.

These arrangements have been controversial because they can raise ethical and legal concerns. Traditional life insurance is designed to provide financial protection for beneficiaries with a genuine insurable interest in the insured's life, such as family members or dependents. IOLI, however, involves parties who may not have any personal or familial connection with the insured, and the motive is purely financial gain.

It's important to note that the legality and acceptance of IOLI arrangements vary, and they may be subject to regulation or prohibition in some jurisdictions. Many insurers and regulatory authorities have implemented measures to deter or address the potential abuses associated with investor-originated life insurance.

In investor-originated life insurance (IOLI), also known as stranger-originated life insurance (STOLI), investors or third parties stand to benefit when the insured individual dies. In these arrangements, investors initiate the purchase of a life insurance policy on the life of another person, often an elderly individual. The primary motive for investors is financial gain. Upon the death of the insured, investors receive the death benefit payout from the life insurance policy. The value of the death benefit serves as the return on the investment made by the third party.

These arrangements have been controversial because they can raise ethical and legal concerns. Traditional life insurance is designed to provide financial protection for beneficiaries with a genuine insurable interest in the insured's life, such as family members or dependents. IOLI, however, involves parties who may not have any personal or familial connection with the insured, and the motive is purely financial gain.

It's important to note that the legality and acceptance of IOLI arrangements vary, and they may be subject to regulation or prohibition in some jurisdictions. Many insurers and regulatory authorities have implemented measures to deter or address the potential abuses associated with investor-originated life insurance.