What kind of relationship do insurers usually have with individuals involved in STOLI policies?

In the context of STOLI (Stranger Originated Life Insurance) policies, insurers typically do not have a direct relationship with the policy owner in the traditional sense. Instead, these individuals usually maintain a separate or indirect connection with the insurance company. STOLI arrangements involve third parties who purchase life insurance on the lives of individuals whom they do not have a significant pre-existing relationship with, often for the primary purpose of profiting from the death benefit.

Since the individuals involved in STOLI schemes are often not individuals that the insurer has any prior dealings with, or any anticipated ongoing relationship, it is accurate to state that there is no existing relationship. This lack of connection differentiates STOLI from standard life insurance practices where a direct relationship and insurable interest between the insurer and the insured are essential components. In traditional life insurance, the insured typically has a direct relationship with the insurer based on the policy purchased, as well as a built-in interest in the policy due to their investment into the premium payments and potential benefits.