$10M STOLI Payout Voided

Prudential Financial Inc. won a federal judge’s approval to void a $10 million insurance policy on the life of a Delray Beach, Fla., retiree, the latest setback to investors who buy older people’s policies in order to later collect the death benefit.

Prudential alleged the policy was an example of unlawful so-called stranger-originated life insurance, in which agents and other middlemen financially induce elderly people to take out policies to resell to investors, and that the application was tainted by fraud.

Reported by The Wall Street Journal, Monday, Dec. 12, 2011