State RegulationsOH specificDifficulty 2/5
An insurance agent in Akron proposes that several investors pay seniors to apply for new life policies, with the understanding that the investors will purchase the policies shortly after issue. How is this arrangement classified under Ohio law?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Policies initiated with no insurable-interest purpose and intended primarily for resale to investors are stranger-originated life insurance, which Ohio addresses through ORC 3916.05(B) and OAC 3901-9-04; the seniors' consent or insurer approval does not cure the arrangement.
Why the other options are wrong
- A) Consent does not legitimize the plan; the arrangement is stranger-originated life insurance prohibited by ORC 3916.05(B) and OAC 3901-9-04.
- B) Insurer approval of the applications does not authorize a scheme initiated primarily for resale to investors.
- C) The plan involves individually originated policies bought for resale, not a lawful group life arrangement.
Memory hook
Stranger at the origin: policies born to be sold are STOLI and stop at ORC 3916.05(B).