4: In a life settlement contract, who does the life settlement broker represent?
A The beneficiary
B The life settlement intermediary
C The owner
D The insurer
Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract. Life settlement brokers represent only the policyowners.
5: An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of
A A prearranged funeral plan.
B A viatical settlement.
C Third-party ownership.
D A STOLI policy.
Stranger-originated life insurance (STOLI) policies are usually purchased by people who have no relationship with the insured with the intention of selling them for life settlements.
12: Stranger-originated life insurance policies are in direct opposition to the principle of
A Indemnity.
B Insurable interest.
C Law of large numbers.
D Good faith.
Because the purchaser of a stranger-originated life insurance policy doesn’t know the insured, or have any interest in the insured’s longevity, STOLI policies violate the principle of insurable interest.
13: Which of the following best defines the owner of a life settlement contract?
A An insurance provider
B A person who is selling the contract
C A person insured under the contract
D A fiduciary for the contract
The term "owner" refers to the owner of the policy who may seek to enter into a life settlement contract. This does not include an insurance provider, a qualified institutional buyer, a financing entity, a special purpose entity, or a related provider trust.