Apollo Denies Illegal Life-Insurance Practices Alleged in Suit

My understanding is:
A woman in her 70’s purchases a life insurance policy.
She sells the policy to a company A for cash up front ($150K). The company proceeds to pay the premiums on the policy for her, expecting to collect the death benefit ($5M).
Company A, which owns a pool of these life insurance policies then sells the pool to company B.
Woman dies, company B collects the benefit.
Woman’s estate sues company B for the death benefit proceeds.

The article also implies that the woman had done this previously, since this wasn’t the first lawsuit.

Can someone ELI5 why this is illegal?

I don’t like Apollo/Athene. They’ve been making headlines a lot recently. I don’t think you could pay me enough to work there (although I know a few actuaries who do work there and they’re nice).

I believe that this is an established practice, and is normally legal as long as there was an insurable interest when the contract was issued.

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The woman had died previously?


I was about to say…

How could she have done this previously?

As in she took out various life policies with different insurers (not sure if in the US aggregate limits are tracked for one person), sold a few to company A and A* for money ($150k each) and then… those companies sold on to further companies (B and B*).

Did they (further companies) all end up trying to collect on her death?

I am a bit confused by this scenario.

If there were multiple policies in force at her death, each policy owner should be able to collect its policy’s death benefit. No two people/entitiies should be able to collect on the same policy.

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so this is just life settlements right? Nothing illegal about that stuff in the US. It’s illegal in some provinces, the regulators have some problems with life insurance policies being used as invesments like this. Plus, in some insurance apps they now ask a question to determine if there’s a third party behind the application. Denied if true.

Bad wording on my part. She had another life insurance policy with a death benefit of $8M, which she also sold. Once she died, her estate also sued the company to recover the proceeds. That case was decided in favor of the estate.

And the current case: