Betting on death

Seriously.  And rooting for it.

I'm involved in a case where investors send their money to this company, and the company buys life insurance policies.  The idea is that the policies are all paid up and will pay off when the insured dies.  Well, some of these insureds sell that policy at a discount ($1m policy at death, I'll sell it today for $500,000, or whatever).  So you invest in the discounted policy and wait for that person to die.  Which is macabre enough.

But, a fun feature of the investment was that the company would send you a list of insureds and a write up of their medical history and status, and an estimated life expectancy, and you pick the horse to bet on.  Only in this case, you want the horse to lose, quickly.  The longer they live, the less you make when they die (because part of your investment goes to paying the ongoing premiums).

In my case at hand, this turned out to be a scam.  The insurance agents were getting a 12% commission right off the top, for one thing, and selling it as an insurance product when it's really a security.  Plus, the company to whom the money was sent was skimming off huge chunks of it. 

But still, this goes on, and if done right is apparently legal, at least in some states.  Wierd.