What is Stranger-Orientated Life Insurance?

by: David John Martin
Total views: 221
Word Count: 405

The current economic climate is causing fraudsters and conmen to innovate when it comes to ripping off innocent people, at least, according to US newspaper The Palm Beach Post. Randy Diamond reports that the elderly among us are now the most likely to become targets due to their eagerness to make some savings back in this time of economic crisis, whilst others are eager to exploit that. Stranger-orientated life insurance is a means by which many OAPs seem to be losing their money, so this article aims to set out exactly what is meant by this phrase; and the risks involved.

In simple terms ‘Stranger-Orientated Life Insurance’ refers to when a person wishes to sell their life insurance policy for an immediate cash sum. The new owner is then responsible for paying the remaining premiums, but, of course, receives the payout once the previous owner dies. Stranger-orientated life insurance policies are now increasingly being sold solely for the cash benefit, whereas previously it would have more likely been a consideration if the owner, for example, suddenly learned that they had a life-threatening illness.

In Florida, this has caused the insurance industry to take serious action against those who are becoming involved in stranger-orientated life insurance deals with their reasoning being that it is a violation to do so. However, it appears that the risk of fraud on applications and the direct conning of innocent people that is the most serious problem currently.

One example where fraud occurs is when an insurance agent offers a significant amount of money but can then modify the policy in order to receive a bigger payout. If this is discovered by the insurance payer, they are then liable to sue and it is the original policyholder who is held initially accountable; most probably resulting in a complex, expensive, and stressful stint at the hands of the courts.

Gradually, it seems that knowledge of the risks in stranger-orientated life insurance deals is becoming a good way of lessening the temptation for OAPs to consider this as a method to make money. However, if one is still tempted, The Department of Insurance, Financial Institutions and Professional Registration highlights some further basic considerations: such as whether you are comfortable with being asked about your health frequently after your policy is sold on, or what your beneficiaries might think about the consequences.

Article Source: http://www.ArticleStreet.com/profile/david-john-martin-5129.html