"Stranger originated life insurance" defined

Sec. 7.8. (a) As used in this chapter, "stranger originated life insurance" means a practice or plan to initiate a life insurance policy for the benefit of a third party investor who, at the time the life insurance policy is originated, has no insurable interest in the insured. (b) The term includes the following: (1) An arrangement under which, at the time of life insurance policy inception: (A) a life insurance policy is purchased with resources or guarantees from or through a person that is not legally permitted to initiate the life insurance policy; and (B) a written or verbal arrangement or agreement is made to transfer the ownership of the life insurance policy or policy benefits to a third party. (2) A trust that is: (A) created to give an appearance of the existence of an insurable interest; and (B) used to initiate a life insurance policy for an investor. As added by P.L.112-2008, SEC.3.