September 15, 2025 | JacobiJournal.com — Ameritas Life Insurance Corp. is pressing the Supreme Court of Georgia to rule that a controversial life insurance arrangement cannot be enforced, arguing the deal amounts to an illegal wager on human life.
At the center of the dispute is an investor-backed life insurance policy that was later purchased by a trust, raising the question of whether such agreements violate Georgia’s long-standing prohibition on wagering contracts. Ameritas contends that allowing the trust to collect benefits would effectively transform life insurance into a speculative investment vehicle, undermining its intended role of providing financial security to families and policyholders.
The case highlights broader concerns within the insurance industry about so-called “stranger-originated life insurance” (STOLI) policies, which regulators and courts nationwide have increasingly scrutinized for potential fraud and abuse.
Insurer Challenges Investor-Backed Policy
Ameritas contends that a trust holding the policy—purchased years after it was originally issued—has no legitimate right to collect death benefits. According to the insurer, such investor-driven transactions undermine the very purpose of life insurance, which is to provide financial security for families, not serve as a speculative investment vehicle.
The company argues that allowing investors to profit from policies they never had an insurable interest in could open the door to widespread abuse of the insurance system. Regulators and industry groups have long warned that such practices distort the risk pool, drive up costs for legitimate policyholders, and erode public confidence in life insurance as a safety net.
Ameritas maintains that if courts uphold these investor-backed arrangements, insurers may be forced to reevaluate underwriting practices and tighten compliance oversight to prevent similar disputes in the future.
Stakes High for Life Settlement Industry
The case is being closely watched in Georgia and beyond, as it could influence how courts treat investor-backed life settlement agreements. Industry experts warn that a ruling in favor of Ameritas could set a precedent that reshapes the market for secondary life insurance transactions.
Legal observers note that these types of arrangements fall into the broader category of “stranger-originated life insurance” (STOLI), where third-party investors acquire policies with no insurable interest in the original policyholder. Courts across the country have wrestled with whether such contracts violate public policy by creating financial incentives tied to another person’s death.
Ameritas argues that Georgia law, like many states, was designed to prevent such speculative practices, and the outcome of this case could set a pivotal precedent for how investor-backed life insurance is treated going forward.
Broader National Trend
Similar disputes have surfaced across the U.S., with insurers frequently challenging so-called “stranger-originated life insurance” (STOLI) policies. Courts have increasingly scrutinized these arrangements, questioning whether they violate long-standing public policy against wagering on human lives.
In several states, high-profile rulings have either voided STOLI contracts outright or limited investors’ ability to enforce them, signaling a judicial shift toward stricter oversight. Regulators have also expressed concern that such practices could distort the life insurance market, inflating costs for policyholders who purchase coverage for legitimate family protection.
Industry experts warn that unless clearer legal boundaries are established, these disputes will continue to surface, creating uncertainty for insurers, investors, and beneficiaries alike.
What Comes Next in Georgia
The Georgia Supreme Court’s decision will determine whether the trust may claim the policy’s benefits, or if the contract will be declared void as against public policy. A ruling is expected later this year and could have ripple effects for insurers, investors, and estate planners across the Southeast.
Legal analysts note that the case could set a binding precedent in Georgia, influencing how courts in neighboring states approach similar investor-backed policies. A decision striking down the arrangement could embolden insurers to more aggressively challenge questionable policies, while a ruling in favor of the trust might encourage continued use of such structures in estate planning and investment circles.
Either outcome is expected to draw close attention from financial advisors, policyholders, and lawmakers monitoring the balance between consumer protection and investment innovation in the life insurance market.
For more context on life settlement regulation, visit National Association of Insurance Commissioners.
FAQs: Ameritas Life Insurance Policy Georgia Ruling
What is the core issue in the Ameritas case?
Ameritas argues that the investor-backed life insurance policy is an illegal “wager on life” and should not be enforced.
What is a STOLI policy?
A STOLI, or stranger-originated life insurance policy, involves investors purchasing life insurance on strangers, often raising public policy concerns.
Why does this case matter beyond Georgia?
The ruling could influence national treatment of investor-backed life settlements, shaping future litigation and regulatory approaches.
When is a decision expected?
The Georgia Supreme Court is reviewing arguments now, with a ruling anticipated before the end of 2025.
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