Viatical settlement firms are specialized companies (or more informally a group of investors) that purchase life insurance policies from individuals with relatively short life expectancies (terminally ill individuals). In the US, 90% of viatical settlements cover AIDS victims.
At the beginning of the contract both parties must feel they are better off with the contract then without it or they wouldn’t sign on the dotted line. The terminal ill individual typically faces unemployment and large medical and hospice bills and most likely has no health insurance. The viatical settlement firm pays the terminally ill individual between 30% - 70% of the face value of the life insurance policy, and in return becomes the beneficiary on the policy. The individual uses immediate proceeds to pay for everyday expenses and his/her high medical expenses. On the other end, if the terminally ill individual passes away, the viatical settlement firm reaps large profits from the benefit payment.
What if the viatical settlement firm tries to sweeten the deal for an HIV-positive person by promising payment of the individual’s health insurance premiums if he/she lived longer than a certain amount of time? Combine that with the vast improvements in AIDS care that has allowed people to live longer than previously expected and the viatical firm made a huge contractual mistake. The health insurance may allow the patient to afford expensive AIDS medicines that keep her alive longer than ever anticipated, and far longer than the viatical firm ever imagined. Thus by promising to pay for the health insurance, the viatical firm is keeping alive someone they want dead.
In one situation, the viatical settlement firm is threatening to abandon the contract because the counterparty is living too long.
Life Partners [the viatical firm] 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."
And why should the investors want to keep paying for her health insurance, she is only valuable to them if she is dead. What a morbid business.