FOR IMMEDIATE RELEASE
Charbonneau-sponsored law protecting senior citizens
from life insurance scheme takes effect July 1;
Draws praise from state leaders and insurance agency
(STATEHOUSE) – Indiana will be the third state to prohibit stranger-originated life insurance policies (STOLIs) when a law Sen. Charbonneau (R-Valparaiso) helped champion through the Senate takes effect July 1.
Charbonneau said the new law is designed to protect consumers – potentially senior citizens – from becoming prey to investors offering one-time cash payments in exchange for being named the beneficiary on their life insurance policy.
“STOLIs have a lot of hidden dangers,” Charbonneau said. “People who invest in STOLIs also have hidden agendas since they are waiting for someone to die. This new law aims to protect consumers and prevent investors from wagering on human life and profiting from the death of the insured.”
According to Charbonneau, STOLI transactions are initiated by investors who approach senior citizens and ask them to take out life insurance policies in their own names specifically to sell the death benefits. Seniors who consent to the transaction receive a one-time cash payment and the investors agree to finance the premiums in hopes of profiting from the life insurance policy by being named the beneficiary. When the senior dies, the investor collects the death benefits. Beneficiaries sometimes sell the benefits to a third party and costly fees usually accompany the taxable transaction.
“Thanks to this legislation, STOLIs will now become an unlawful practice across Indiana,” Charbonneau said.
This new law is drawing praise from both Gov. Mitch Daniels and the Indiana Department of Insurance.
“Our state was one of the first in the nation to act on this issue and to pass such a critical consumer protection measure,” Daniels said.
Jim Atterholt, commissioner of the Indiana Department of Insurance, named Charbonneau “Honorary Insurance Commissioner” in recognition of his legislative efforts to protect senior citizens and Hoosier insurance consumers.
“Senator Charbonneau made a special contribution for the betterment of the insurance industry and truly deserves recognition for his work to protect the integrity of life insurance and policy holders,” Atterholt said. “I congratulate him and the non-partisan efforts by Indiana lawmakers for taking a stand against such abusive practices.”
Sen. Charbonneau represents Senate District 5, which includes Starke County and portions of Porter, LaPorte, Marshall, Jasper, Pulaski, and St. Joseph counties.
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