One question that comes up regularly in litigation involving stranger-originated life insurance (STOLI) is whether, if the insurance policy is rescinded, the insurer is entitled to keep the premium, so as to avoid unjustly enriching a party that perpetrated a fraud.
A federal district court this month addressed this question, concluding that the insurer is, in that case, entitled to keep the premiums.
The case is PHL Variance Ins. Co. v. The P. Bowie 2008 Irrevocable Trust, C.A. No. 10-070-M (D.R.I. Sept. 5, 2012), and the full opinion is available here.