Investor-owned life insurance (IOLI) refers to arrangements where a policy is initiated for the benefit of investors without a legitimate insurable interest, often associated with stranger-originated life insurance (STOLI). Such structures raise legal and public-policy concerns and may be void or contestable under state law. IOLI differs from lawful secondary-market transactions in which an in-force policy is later sold. Producers must ensure insurable interest at issue, avoid inducements, and follow state anti-STOLI statutes and carrier guidelines.

Agencies train producers to avoid STOLI/IOLI schemes, verify insurable interest at issue, and reject improper financing inducements. Compliance reviews marketing to ensure it does not promote prohibited arrangements.