Before closing its legislative session on May 2nd, the Florida House and Senate unanimously approved Senate Bill 648 (“SB 648” or the “Bill”) addressing insurable interest requirements with respect to life insurance policies. The Bill is different from the NAIC and NCOIL Viatical Settlement Models, but addresses many of the same issues surrounding stranger owned life insurance arrangements (“STOLI”). For example, while the Bill allows an individual to purchase insurance on his or her own life and designate any beneficiary that he or she deems appropriate, it prohibits purchase of a policy on another’s life (e.g. a STOLI arrangement) unless the benefits are payable to the insured, his or her personal representative, or a person having an insurable interest in the life of the insured at inception of the policy. SB 648 requires, with certain enumerated exceptions, that the insured provide written consent as a prerequisite to issuing a contract. This requirement is satisfied by signature on the insurance application. Additionally, the Bill provides for a right of recovery against any person who receives life insurance benefits if such person did not have an insurable at inception.
The Bill has been sent to the Governor for signature. To view a copy of the bill, click here.
