The Wall Street Journal recently published a front-page article on stranger-owned life insurance (STOLI), which discussed one particular agent who was very active in this market. This agent faces possible jail time for alleged fraud and misrepresentation.
STOLI is illegal in many states and the vast majority of agents are not involved in the marketing of these products. In fact, most insurance companies will not issue a policy if they know it involves a STOLI sale.
My point to our readers is that most agents are honest and ethical and look out for the best interests of their clients and would not knowingly falsify documents or misrepresent products to their clients. Agents who are members of professional associations such as the Million Dollar Round Table and the National Association for Insurance and Financial Advisors agree to a standard of ethics pledging to the highest standards of ethics and professionalism.
In this case, one bad apple in this case does not spoil all.
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