Philadelphia Inquirer – 01/22/2006:
Smith felt like a normal, healthy thirtysomething when she got her dual death sentence in 1992. She began treatment, but wasn’t optimistic. Back then, it seemed as if everyone who had AIDS died quickly. Single, self-employed and with little savings, Smith was intrigued by an ad offering to buy her life insurance. The terminally ill person gets money to live comfortably until the end – and then, the company makes a killing.
And so, in 1994, Smith sold her $150,000 life insurance policy to Life Partners Inc. of Waco, Texas, for $90,000. As part of the contract, Life Partners set aside $5,510.64 to pay the premiums for Smith’s health- and life-insurance policies, which were linked and could not be separated.
By investing in her fate, Life Partners assumed responsibility for the premiums as long as she lived.
Smith defied the odds. She recently turned 50 – and thanks to daily medicine, says she generally feels fine.
Stung by the costly miscalculation, the publicly traded company is balking at paying Smith’s combined health- and life-insurance premiums.
Her lawyer, Jacob Cohn, feels no sympathy for a company that normally profits handsomely from death. “They’re not a charity. These people win by having her die fast. They were not counting on a revolution in the treatment of AIDS,” notes Cohn, of the Cozen O’Connor firm, who took Smith’s case for free.
Why do people expect compassion from corporations that exists only for the purpose of profit. Insurance companies often try to wiggle out of paying claims based on marginal contract wording. They keep lots of investigators and attorneys hired for this. Actuaries are surprising accurate. Don’t judge your death risks by birthdays, use the increasing premiums of term life insurance policies
If the company stopped paying the insurance premiums, then would they violate the contract and hence lose all benefits? Would the woman, or her family, then be able to continue to pay the premiums and thus collect upon her death?
She should offer to release them from the contract for a fee. Then use the fee to continue the policy payable to her.
She looks pretty good for 50, but the black outfit is a bit much.
I think she’s more concerned about the health insurance than the life insurance.
The company signed a contract agreeing to pay her health insurance until she dies. They should be held to the contract.
The company was probably maneuvering for a settlement offer. Faced with large legal fees and aggravation, many defendants will accept a settlement. Like it or not our legal system favors those with the most resources. Her attorney may have taken this public hoping the waive them off with negative PR.
In turn, Life Partners sells shares in those policies, called “Viaticals” to investors. I’ve got a share. My guy is still alive (which is fine with me). I’ve lost money on the deal, but not all that much – felt good about keeping it anyway. This could get interesting, though….
(Guess I could sue my stockbroker….)
The concept was great, but the rules changed.
And, of course, a contract is a contract – that health insurance should be paid.
(There may be a risk to _all_ of the folks that Life Partners and others “helped” – enough word gets out and these companies may go under. Their “clients” could then sue them, but for what?)
Gee, isn’t it funny how, sometimes, in business, you lose money. While something like Life Partners does indeed help some terminal folks live their last in dignity and reasonable comfort, betting on someone’s death is a risky business, not a sure thing…as sad as it is, they make it up on volume.
Best Regards,
DAve
Profitering from death has been going on in Calcutta, India for a very long time. I am not sure if it still goes on now, it probably still does… Sick, Dying, Poverty ridden folks would sell their bones to “entrepreneurs” before they were dead. The buyers would wait for the sick person to die and then collect their body from their family. They would give it a sort of last rites and then off with their skin and flesh and they would acquire the bones to make skeletons for universities, schools and for sale on the general market. A very good example of that is found in the book City of Joy, by Dominique Lapierre.
I guess these days they are probably selling healthy kidneys!!!