Patient's survival bad for business

When M. Smith learned she had AIDS in the early 1990's, she figured it was a death sentence. "It was mind numbing," Smith says.

She was 35, healthy, and never suspected that an ex-boyfriend, who died years earlier of AIDS related complications, had infected her.

Smith, who also had cancer at the time, says her prognosis gave her less than two years to live. So, she started to get her affairs in order.

One day, flipping through a magazine for HIV positive people, Smith, who asked we shield her identity, saw an ad offering to buy her $150,000 life insurance policy. Smith had no children and no husband.

According to the contract she signed, the company, Life Partners, would pay her $90,000 up front, and cover her combined life and health insurance premiums if she lived longer than two years. When she died, the company would collect the full value of the policy, potentially a windfall profit of more than 60 percent, depending on when Smith died.

That was 12 years ago. Smith is still alive, and the company has paid out $100,000 in premiums, according to Smith's attorneys. But Smith and her lawyers also claim that over the years, Life Partners has been trying to get out of its contract, claiming Smith should pay her own health premiums and at one point sending a letter saying, "The investors ... are no longer willing to support the cost of your health insurance."

Let me understand that - a business signed a contract with an individual. The contract - due to a perfectly forseeable though somewhat unlikely course of events - led to a situation where the business is losing money. The business wants to unilaterally terminate or change the contract before it is done paying its dues.

Could I act like that? Could I just pick a good time and decide I am done paying my mortgage? How come I can not?

Well, you get my drift - even my suggeting abbrogating my personal financial responsibilities sounds silly. Then why are businesses such as insurance routinely allowed to speak of that as something normal or close to it?

Personally, I could hardly care less what those investors' preferences are. They ought to honor their obligations until while they can; if they no longer can they should file for bankrupcy. That is what business is about - you don't always get to win.

tags: insurance  fraud  aids