In a STOLI/IOLI transaction, which action is not required of the investor?

• A. Submit the premium for the policy at issue
• B. Fill out the application for Life Insurance on behalf of the Insured
• C. Provide evidence of insurability for the insured
• D. Disclose the existence of the arrangement to the insurer

Answer: (B)

In a STOLI/IOLI setup, the investor’s role is to finance and own the policy, while the insured is the person whose life is covered. The life-insurance application is typically completed by the policyowner or applicant and requires the insured’s information, signatures, and consent, along with medical evidence provided for underwriting. Because of that, the investor is not the one who fills out the application on behalf of the insured; doing so would bypass the insured’s role and the underwriting process. The investor is still expected to submit the premium and to disclose the existence of the arrangement to the insurer, and the insurer will obtain or require evidence of insurability for underwriting. Therefore, the action not required of the investor is filling out the application for life insurance on behalf of the insured.