Glossary
Stealth Program
(Premium Finance "up-front deals," "wet-paper transactions" are slang terms used in the life insurance premium finance industry to refer to the purchase of a life insurance policy with sole intent and in most cases the pre-arrangement of the secondary sale of that policy to a buyer within the policy's contestability period (first two years). To achieve these transactions, the insured, the agent and the program’s originator must collaborate in an illegal act that misrepresents and defrauds the issuing life insurance carrier. If detected by the insurance carrier inside of the two year contestability period, the carrier will likely rescind the policy, resulting in a refund of the policy's premiums and in the case of the death of the insured, a possible negation of the payment of the death benefit to the policy's beneficiaries.
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