Every day in insurance news there is a reminder that the whole issue of life settlements and particularly life settlements as investment portfolios just really couldn’t be more ethically and morally wrong.
This is a subject that I’ve minced no words on over the years. It was wrong when it started as viatical offerings during the AID’s epidemic and it’s wrong when older people are convinced that it is prudent to sell their life insurance, the whole time skirting what is best for the beneficiaries, the very people for whom the life insurance was purchased. It is wrong today that death has become a commodity that is bought and sold like corn futures.
The point, and I believe it is a valid point, that I have driven home in the past is that life insurance is based on mortality assumptions and no one, and I mean no one, has done any mortality study on the experience of those who sell their life insurance policies.
I’ve been called paranoid and silly for raising the question in the past about how our tremendously unethical corporate culture will deal with the fact that their balance sheet is having a rough quarter because people aren’t dying as quickly as they should. There is no moral high ground in corporate America. Do you really think that, especially with so many people out of work, that they couldn’t get some assistance in shifting the mortality experience more in their favor? Let me put that in simpler terms. Do you really believe that big corporations wouldn’t consider offering, say, $5000 to create an untimely death when their income from that could be $5 million?
Bottom line. More life insurance companies are coming out with rules that don’t allow this practice every day. It isn’t what life insurance was meant for and it shouldn’t be allowed.