What is the term for a life insurance arrangement that circumvents insurable interest statutes?

What is the term for a life insurance arrangement that circumvents insurable interest statutes?

• A. Investor-Originated Life
• B. Third-Party Life
• C. Beneficiary Insurance Plan
• D. Secondary Market Life

Answer: (A)

The term "Investor-Originated Life" refers to a life insurance arrangement specifically designed to bypass insurable interest statutes. In general, insurable interest laws require that the policyholder has a legitimate financial interest in the life of the insured, meaning they would suffer a financial loss if the insured were to pass away. Investor-Originated Life typically involves investors purchasing life insurance policies not based on any personal relationship with the insured but rather to profit from the death benefit. When these policies are taken out primarily for investment purposes, it can lead to ethical questions and regulatory scrutiny because it may encourage individuals to take out policies on others' lives, focusing solely on profit rather than genuine insurance need. Other options, while related to life insurance transactions, do not specifically refer to the arrangement that evades insurable interest. Thus, "Investor-Originated Life" is the accurate term for this type of arrangement.

The term "Investor-Originated Life" refers to a life insurance arrangement specifically designed to bypass insurable interest statutes. In general, insurable interest laws require that the policyholder has a legitimate financial interest in the life of the insured, meaning they would suffer a financial loss if the insured were to pass away.

Investor-Originated Life typically involves investors purchasing life insurance policies not based on any personal relationship with the insured but rather to profit from the death benefit. When these policies are taken out primarily for investment purposes, it can lead to ethical questions and regulatory scrutiny because it may encourage individuals to take out policies on others' lives, focusing solely on profit rather than genuine insurance need.

Other options, while related to life insurance transactions, do not specifically refer to the arrangement that evades insurable interest. Thus, "Investor-Originated Life" is the accurate term for this type of arrangement.