We have written in this blog about Life Insurance Settlements, a legal practice in many states that allows a life insurance policy holder to redeem a policy for a cash amount that is generally more than the surrender value. For those looking to convert a mature life insurance policy into some money, the option is a real alternative.

But the Ohio Attorney General has a strong warning for anyone who is contacted by strangers who offer an incentive to buy life insurance and then turn it over to a group of “investors” in exchange for cash. It may be illegal!

The Stranger Originated Life Insurance (STOLI) concept would have you purchase a policy and then name the investors as the beneficiary of the policy. These “strangers” would then pay the premiums. It’s a morbid idea. The sooner you die, the more money they make. That fact alone should be cause for concern.

And there are other serious concerns about the scheme.

The same Attorney General informs that the strangers who would own your policy could obtain access to your personal data and medical records. They would also have the right to contact you from time to time to check on your health condition. These outsiders could sell or transfer your policy at any time, so you might not know who the beneficiary is. The transactions might also prohibit you from buying life insurance in the future if you need it or adversely affect your eligibility to qualify for Medicaid. The payment amount you receive for selling your policy is not protected from claims by creditors, and it may have tax consequences. Lastly, you could face criminal charges if you engage in a STOLI transaction.

The bottom line: Compared to taking life insurance from strangers, taking candy is a lot sweeter.

Play it safe, smart and secure by trusting your most important protection to the people who protect so many others. Talk to Efinancial about a free life insurance rate quote today!

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