In Investor-Originated Life Insurance (IOLI), who typically pays the premiums to obtain the life policy?

• A. The insured
• B. The investor
• C. The insurer
• D. The policy's beneficiary

Answer: (B)

In Investor-Originated Life Insurance, the investor is the one who funds the policy. The investor arranges a life insurance policy on another person’s life and pays the premiums to keep that policy in force. The policy is typically owned by the investor, and the death benefit is paid to the investor (or an entity the investor designates) when the insured dies. This funding role by the investor is what distinguishes IOLI from ordinary life insurance, where the insured or the policy owner usually pays the premiums. The insured is the person whose life is insured, the insurer is the company issuing the policy, and the beneficiary is who receives the death benefit, not the payer in this setup.