other worlds

Business people can find a way to profit from anything. But did you know that there is a financial racket that makes money from death? I’m not talking about the contract killer industry, either–but something technically called a “viatical settlement,” and unofficially called “death futures.”

It’s actually pretty simple. A speculator finds a person who is terminally ill and who happens to own a life insurance policy. The speculator buys out the policy from its holder, giving them a cash lump sum payment, and the holder names the speculator as the new beneficiary. When the policy holder dies, the speculator receives the benefit. If the cash paid for the policy is less than the payoff (which of course it would be), the speculator pockets the difference.

This sounds macabre–and it is–but it’s perfectly legal and has been for a century, since the U.S. Supreme Court ruled on a case involving such a contract in Grigsby v. Russell. It certainly sounds a little unethical, and perhaps it is pretty callous to make money on a person who’s terminally ill. In some cases it could work out to mutual benefit, though. If the dying person needs money now and he/she is not dispossessing a beneficiary of the life insurance policy who might need the money, it could be a win-win deal; the ill person is relieved of the burden of paying the premiums, and has money now to settle their affairs.

The death futures industry really got going in the early 1980s when the AIDS epidemic was in full swing. Financial operators sought out gay men with AIDS, who were typically young, had no dependents and had life insurance policies through investments or their employment. At that time the life expectancy of an AIDS patient was very low, so a quick death was virtually guaranteed. Some of these operators were pretty shady; one of the biggest is currently serving a 20 year prison sentence. Needless to say, states have begun to regulate viatical settlements, and the insurance industry has developed ethical standards for this practice that they encourage everyone to abide by.

I’m not sure how I feel about this practice. Capitalism at its “finest,” I suppose.