Life Settlements – Ethical or Not?

A recent article in the Wall Street Journal talks about how a lawyer in Rhode Island is advertising and giving out $2000 in cash to policy holders who are terminally ill. In return, he is asking to be the beneficiary on their life insurance policies.

There have been many arguments for and against the investment. Some believe that it is a viable investment and is ethical while there are people who argue the believers. For those of you who would like to know what a life settlements investment is in a nutshell, please see my earlier post by clicking here. (Please note that I am in no way arguing for or against the investment; it is something I researched on as part of my internship at Quantum Financial Advisors in Washington, DC.)

Joseph A. Caramadre, the lawyer mentioned in the article, is known in the state of Rhode Island for his philanthropic endeavors. According to his lawyer and the article, Caramadre has given out $2000 anyway to people who have refused his offer of taking over their life insurance policies.

Relatives of the insured in question have looked down upon and filed lawsuits against life settlements investors. Insurance companies have filed lawsuits against the legality of these investments (please see the article in WSJ for more) making the rules surrounding these investments stricter. But, it really comes down to individual perception on the ethical aspect of these investments.

What are your thoughts?

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    • Dave A.
    • March 24th, 2010

    It doesn’t take a genious to see that this is Unehtical, especially for an attorney (but aren’t they known for poor ethics anyway?) BUT, if a terminally ill person does need $2000 and are of sound mind, I don’t see any reason not to exchange an insurance policy. The only person hurt is the original beneficiary of said policy and any family members left that must strap on the burden of buriel costs.

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