Contingent Fee Business Litigation Blog

Larry King Settles Life Insurance Suit

     Last October, television personality Larry King filed suit against insurance brokers Alan Meltzer and the Meltzer Group, Inc.  The suit concerned policies that are sometimes called “Stranger Owned Life Insurance,” "STOLI," or “Speculator Owned Life Insurance.”  (see the complaint).  The essence of a “STOLI” transaction is that the insured person buys the policy on his life while intending to immediately sell the policy to a third party.

    King alleged that, on the advice of the brokers, he bought a $10 million policy on himself and promptly sold it for $550,000. He also sold an existing $5 million policy for $850,000 in cash. King’s suit alleged that the brokers were liable to him because he did not receive enough money for the policies, the brokers did not adequately advise him about his continuing life insurance needs, he had unexpected tax consequences from the transactions, and the brokers improperly benefitted themselves at his expense.

     King’s suit also alleged that the brokers sold the policies on his life to an entity named Coventry First, LLC, a member of The Coventry Group. As I have previously written, The Coventry Group is the brokerage firm that drafted memos concerning Winn-Dixie’s policies of “Corporate Owned Life Insurance” that spawned the name “dead peasant” insurance for COLI products.  (see the entry). 

     King agreed to a settlement during July 2008.  The presiding court entered an order dismissing the case on August 4, 2008 because of the settlement.  The parties did not disclose the settlement terms. 

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Suvacrew - November 6, 2008 9:48 AM

I find it interesting that LK would admit to doing the transaction with the intention of overriding the insurable interest aspects of Life Insurance as he is filling out the application. He has a full cadre of advisers he relies upon for his finances I'm sure. He knew what was up and was only prompted to file suit for avarice and greed. He heard at a cocktail party that he could have gotten more...and obviously they "settled" by giving him more $$$.

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