17B:30B-18 Engaging in stranger-originated life insurance prohibited.
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/nj/title-17b/chapter-30b/17b-30b-18·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
1. a. No person shall directly or indirectly engage in any act, practice or arrangement that constitutes stranger-originated life insurance.
b. A contract, agreement, arrangement, or transaction, including, but not limited to, a financing agreement or any other arrangement or understanding entered into, whether written or verbal, for the furtherance or aid of a stranger-originated life insurance policy or practice shall be void and unenforceable at the outset.
c. A trust that is created to give the appearance of an insurable interest and that is used to initiate or procure policies for investors shall be in violation of the insurable interest laws of this State and the prohibition against wagering on life.
d. Notwithstanding the provisions of N.J.S.17B:25-4, a life insurer may contest a life insurance policy on the grounds that it was obtained by a stranger-originated life insurance practice, as defined in this section, at any time.
e.
(1)As used in this section, "stranger-originated life insurance" or "STOLI" means an act, practice or arrangement to initiate or procure the issuance of a policy in this State for the benefit of a third-party investor who, at the time of policy inception has no insurable interest under the laws of this State in the life of the insured.
(2)STOLI practices shall include, but shall not be limited to, cases in which:
(a)a policy is purchased with resources or guarantees from or through a person or entity who, at the time of policy inception, could not lawfully initiate or procure the policy himself, herself, or itself; and
(b)at the time of policy inception, there exists an arrangement or agreement, to transfer, directly or indirectly, the ownership of that policy or the policy benefits to a third party.
f. A STOLI arrangement shall not include an otherwise lawful viatical settlement contract as permitted by the "Viatical Settlements Act," P.L.2005, c.229 (C.17B:30B-1 et seq.).
L.2020, c.105, s.1.