What are the issues with respect to getting premiums refunded from stranger originated life insurance policies?
Refunding premiums from stranger originated life insurance (STOLI) policies can be difficult, but not impossible. Since STOLI policies are designed to be transferred to an investor who pays the premiums, the original policy owner may not have the right to cancel or surrender the policy once ownership has been transferred. The investor who takes over the policy may have paid significant premiums and may think he is entitled to receive the death benefit upon the death of the insured, but the laws vary significantly.
However, there are circumstances where refunds may be possible. For example, if the original policy owner was deceived or misled into purchasing the policy, or if the policy was issued in violation of state insurable interest laws or other legal requirements, a court may find that the policy is void or unenforceable. In such cases, the policy owner may be entitled to a refund of premiums paid, although the amount of the refund will depend on the specific circumstances of the case.
Another potential avenue for refunds is through settlements or lawsuits involving the insurance company or other parties involved in the sale of the STOLI policy. In some cases, insurance companies may agree to settle claims related to STOLI policies in order to avoid lengthy and expensive litigation. Settlements may include partial or full refunds of premiums paid, although again, the amount of the refund will depend on the specific circumstances of the case.
For owners and investors attempting to obtain a refund of premiums from a STOLI policy, it can be a complex and difficult process. If you believe that you may be entitled to a refund of premiums from a STOLI policy, it's important to consult with one of our top life insurance lawyers.