The Life Insurance and Annuities Committee at the National Association of Insurance Commissioners (NAIC) has adopted a stranger-originated annuity (STOA) transactions model bulletin draft.
The committee approved the draft earlier this week in Austin, Texas, during a session at the NAIC’s spring meeting.
A STOA transaction is a move by investors or others to get individuals with short life expectancies to buy annuities that provide guaranteed minimum death benefits. A STOA arranger pays the ailing individual a small sum, then seeks to collect the death benefit when the individual dies.
“In order to find individuals who meet the aforementioned criteria, these producers and/or investors have been known to take out advertisements in papers as well as solicit individuals residing in nursing homes or hospice,” officials say in the STOA bulletin draft.