Suck it up, reapers
Via Jedmonds at Pandagon, who notes this is "probably the most f#cked up thing I've read in awhile," a contention with which you won't find me disagreeing, comes this story from the Philadelphia Inquirer about a woman who, while suffering from both AIDS and cancer in the early '90s, was given two years to live. At the time, M. Smith was single, self-employed, and had little savings, so when she saw an ad offering to buy her life insurance, she followed up, and summarily had her life insurance policy bought up by the ironically named Life Partners Inc.
Under such deals, the buyer gives the terminal patients lump sums, thereby providing them with money to live comfortably until their deaths, at which time the buyer receives a windfall in the form of the life insurance payout. More than a decade ago, AIDS patients were seen as "a sure thing," but times they are a-changing, and now Life Partners, which paid Smith $90,000 for her $150,00 life insurance policy (which was inseparably linked to her health insurance), is pissed that Smith has the unmitigated temerity to still be alive.
Had Smith perished on schedule, Life Partners Inc. would have made $60,000 on a $90,000 wager - a 66 percent return on the investment.
Instead, the company that expected to make a profit on Smith's life insurance policy wound up spending $100,000 more keeping her alive.
Now, Life Partners' attempt to wriggle out of the relationship has led to one of the most morbid contract disputes ever filed in New Jersey Superior Court.
Stung by the costly miscalculation, the publicly traded company (www.lphi.net) is balking at paying Smith's combined health- and life-insurance premiums.
A stranger claiming to represent angry investors has twice called Smith at home to ask her how she was feeling...
By investing in her fate, Life Partners assumed responsibility for the premiums as long as she lived.
"Purchaser," the contract read, "agrees to make any necessary contributions to the escrow fund to pay future premiums in the event that escrowed funds are exhausted and Seller shall have no further liability for payment of premiums on the policy."
...Smith defied the odds. She recently turned 50 - and thanks to daily medicine, says she generally feels fine.
Though Life Partners has wowed investors with regular dividends and an average 16 percent return, the Smith case has been all pain, no gain.
The cost of insuring her has jumped from $3,000 a year to $26,000 - more than she earns in a year...
"We didn't buy her health insurance. There's no value there, it doesn't benefit us," [Life Partners' president and General Counsel, Scott Peden] told me in a brief phone interview Friday.I believe the precise legal term for that, Mr. Peden, is tough titties.
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