Final answer:
STOLI violates the contractual element of insurable interest because it involves third parties without a genuine financial loss or hardship interest in the insured person.
Step-by-step explanation:
Stranger-Originated Life Insurance (STOLI) has been found to be in violation of the contractual element of insurable interest. An insurable interest exists when the beneficiary of a life insurance policy is likely to suffer genuine financial loss or hardship if the insured person dies. In the case of STOLI, policies are initiated solely for the purpose of selling them for a profit to a third party who has no such interest in the insured, thus there is no insurable interest and this violates one of the fundamental principles of legitimate life insurance contracts.