Elaborate life insurance schemes that can prey on elderly Minnesotans are now against the law in the state.
Gov. Tim Pawlenty on Saturday signed into law a bill that outlaws so-called stranger-originated life insurance (STOLI) practices.
The bill, which was heavily debated by the state's insurance industry, easily sailed through both the House and Senate last week.
It is an attempt to stop speculators from enticing elderly people to take out an insurance policy by offering large cash payouts in exchange for having the speculators named as the beneficiary, usually after two years.
During hearings, one lawmaker had called the practice "perverse" while another described it as "a wager on human life" that targeted elderly victims who do not have long to live.
The bill was closely watched by lobbyists representing the life settlement industry, who argued that actual cases of predatory STOLI practices were infrequent.
In many cases, they said, legitimate life settlement contracts offered a chance for elderly people who could no longer afford to pay their premiums a chance to sell their life insurance policies for financial gain.
The new law will affect insurance policies issued after Aug. 1.
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