Delaware Supreme Court allows insurers to challenge STOLI policies

Court says stranger-originated policies violate state rules against wagering

Last week the Delaware Supreme Court ruled that insurers can contest life policies that pay investors when the subject of the policy dies.

According to two opinions filed on Sept. 20, the federal court in Wilmington asked the state high court to interpret Delaware’s law for honoring stranger-originated life insurance (STOLI) policies. The insurers in the two cases claimed the life insurance policies were void because the beneficiaries were part of a scheme in which investors paid the premiums.

Danielle Feinstein

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