In short: In Wells Fargo Bank v. Pruco Life Insurance Co., 200 So. 3d 1202 (Fla. 2016), an insurer tried to void multimillion-dollar policies years later as stranger-originated life insurance. The Florida Supreme Court said no: the policies had an insurable interest when issued and became incontestable after two years under § 627.455. The Legislature later responded with § 626.99289.
The Facts
Pruco issued a $10 million policy on Arlene Berger in 2006, naming her husband as beneficiary. The application overstated her net worth and income. The policy moved through a trust and a lender to a Wells Fargo client.
Pruco issued two $5 million policies on Rosalind Guild, in her 80s, in 2005, naming her daughter. Those applications also inflated her finances, and the policies were later transferred to an investor.
Pruco sued to void the policies about four and seven years after they were issued, arguing they were STOLI schemes lacking insurable interest.
The federal courts split, and the Eleventh Circuit certified questions to the Florida Supreme Court.
The Decision
The Florida Supreme Court answered the rephrased certified question no (Case No. SC15-382, Sept. 22, 2016; opinion by Justice Polston).
The policies had the insurable interest § 627.404 requires at inception, because family members were the original beneficiaries.
Under the plain language of § 627.455, they became incontestable two years after issue, and the Court declined to create a STOLI exception, leaving that to the Legislature. It did not reach a second question about good faith.
Justice Canady concurred in result.
The Law
Current law (2026): in 2017 the Legislature created § 626.99289, which, notwithstanding § 627.455, declares arrangements tied to a stranger-originated life insurance practice void and unenforceable. Section 626.9911 defines that practice as a fraudulent viatical settlement act. Whether these provisions reach older policies or the policies themselves should be checked for any specific case.
Section 627.455 still sets a two-year contestability period for most life policies.
Lessons
- Life insurance can outlive the family relationship it was bought for. Know who owns and who is beneficiary of policies on aging parents.
- Selling or financing a policy shortly after issuance raises STOLI and viatical-settlement issues under current law.
- Insurers that wait past two years face a high bar to rescind.
- In probate, life insurance usually passes by beneficiary designation, outside the estate, so ownership and beneficiary changes matter.
Source: Opinion, Wells Fargo Bank, N.A. v. Pruco Life Ins. Co., No. SC15-382 (Fla. Sept. 22, 2016)
Watch the Oral Argument
This is the recording of the Florida Supreme Court oral argument. The video title describes a loophole being enforced; the Court applied the incontestability statute as written. What lawyers and judges say at argument is not the ruling; the decision is summarized above.
Life Insurance Loophole Enforced: STOLI Scheme | Wells Fargo v. Pruco | SC15-382
Go Deeper
- Does a Revocable Trust’s Trustee Owe Anything to Contingent Heirs? (Capo v. Capo)
- Purge Paid, But Homestead Still Ordered Sold for Child Support? (Pacin v. Granja)
- Can an Irrevocable Trust Be Ended If the Settlor and Beneficiaries Agree? (Peck v. Peck)
Frequently Asked Questions
What is stranger-originated life insurance (STOLI)?
A scheme where investors arrange for an older person to buy life insurance so the investors can acquire the policy and collect the death benefit.
Can a Florida insurer cancel a life policy after two years?
Generally no. Section 627.455 makes most policies incontestable after two years, and Pruco applied that even to alleged STOLI policies.
Did Florida change the law after Pruco?
Yes. Section 626.99289 (2017) declares STOLI arrangements void notwithstanding § 627.455.
Does life insurance go through probate?
Usually not. It is paid to the named beneficiary unless the estate is the beneficiary.
Talk to a Florida probate litigation lawyer
Weidner Law, P.A. handles Florida probate, trust, guardianship and elder-exploitation disputes from St. Petersburg. If you need a probate litigation lawyer, call (727) 954-8752 or email weidner@mattweidnerlaw.com.
Read the law yourself, free: the full Florida Probate Code and Probate Rules and the Florida Trust Code are on floridarules.net.
This article is general information about Florida law, not legal advice about your situation. Reading it, watching the videos, or contacting the firm does not create an attorney-client relationship. Every case turns on its own facts, and past results do not guarantee a similar outcome. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
