Wells Fargo Bank, N.A. v. Pruco Life Ins. Co.

This case involved a dispute over the validity of three stranger-originated life insurance (STOLI) policies. The United States Court of Appeals for the Eleventh Circuit certified two questions of Florida law to the Supreme Court that were determinative of the case and for which there appeared to be no controlling precedent. The certified questions involved two Florida statutes: Fla. Stat. 627.404(1), requiring that an insurable interest exist at the inception of each life insurance policy, and Fla. Stat. 627.455, providing that an insurance policy is incontestable two years after its issuance. STOLI transactions offer an insured (often an elderly one) “free” or “risk-free” insurance in exchange for transferring the policy to the investor after the two-year incontestability period has expired. The Supreme Court answered that a party cannot challenge the validity of a life insurance policy after the two-year contestability period established by section 627.455 because it is created through a STOLI scheme. View "Wells Fargo Bank, N.A. v. Pruco Life Ins. Co." on Justia Law