On January 10, 2008, the Illinois Division of Insurance (“DOI”) issued a consumer alert advising caution with respect to “Stranger/ Investor Originated Life Insurance” (“STOLI”) arrangements. The alert describes certain types of STOLI arrangements, and distinguishes traditional life insurance sales from STOLI transactions, noting that the latter serves an investment, rather than a protection purpose. Furthermore, while the alert does not claim STOLI arrangements are prohibited, it specifically notes that the DOI “does not sanction or approve STOLI arrangements” and that such arrangements are subject to applicable law.

Click here to read the consumer alert.