 March 1999Death WatchBy Kim LankfordBy buying life insurance policies of the terminally ill, investors thought they were getting a sure payoff from a humanitarian investment. Now they're waiting for the policyholders to die.For more than a decade after her husband died, Betty Paxton barely touched her savings, other than to reinvest CDs and savings bonds when they matured. But two and a half years ago, Paxton, then 78 and worried about her health, filled out a card she'd received in the mail requesting more information about probate and estate planning. A few weeks later, an insurance agent arrived at the door of her Ohio apartment. Initially he sold Paxton an annuity. Then, a little over a year later, the agent was back. He urged her to cash in her savings bonds and buy a viatical settlement--a life insurance policy that a terminally ill person sells to receive part of the death benefit early. The agent told Paxton she would earn a guaranteed 24% by investing in policies of people expected to live 24 months or less. When the insured person died, she would receive the death benefit. Paxton felt uncomfortable about profiting from someone's death, but the agent reassured her that her investment would give terminally ill people money to help them live during their final days. He said 60 Minutes had called viaticals "a perfect no-risk investment." The agent would not leave, Paxton says, until she promised to sell her savings bonds and buy a viatical investment--even though she'd lose four months of interest by cashing in early. As Paxton's CDs and savings bonds matured over the next five months, she bought a total of $33,000 worth of viatical-settlement investments on three people who, she was told, had life expectancies of 24 months or less. Page 1: For more than a decade... |
