What is a life insurance arrangement that circumvents insurable interest values called?

The correct choice highlights Investor Originated Life Insurance (IOLI) as a life insurance arrangement that circumvents traditional insurable interest requirements. Insurable interest generally means that the policyholder has a legitimate interest in the continued life of the insured, such as a family relationship or financial dependency.

IOLI allows investors to purchase life insurance on individuals with whom they do not have a close personal or financial relationship, often to profit from the death benefit upon the insured's passing. This practice raises ethical and regulatory concerns, as it shifts the focus from providing protection to a potential investment opportunity, thereby challenging the foundational principles of insurable interest in life insurance.

In contrast, the other choices listed—Universal Life Insurance, Term Life Insurance, and Whole Life Insurance—are types of life insurance policies that adhere to traditional insurable interest concepts. They are structured to provide coverage based on established risk factors related to the insured's life, ensuring that the policyholder has a vested interest in the insured's longevity.