Stranger-Originated Life Insurance, or STOLI, is an arrangement whereby an investor-speculator, with no insurable interest or direct relationship with an insured, initiates and/or finances a life insurance policy to benefit from the insured's eventual death. Often described as a human-life wager, STOLI schemes are illegal because of the perverse incentive such relationships create: the investor-speculator is directly incentivized to see the insured's early demise.
