Chapter 5, Problem 2RE

Summary Introduction

Case summary: A person JS is the CEO of a company RL. The company RL deals in buying life insurance policies at a discount from patients who are on their death bed and sells the same to investors. The terminally ill patients receive payments as a percentage of future death benefits. The investors buy the insurance policies at 85 percentage of the value of future benefits. The patients utilize this money for their treatment, and the investors are entitled to a guaranteed return on their investment. The company RL draws a profit from the difference between the sale and the purchase price. According to JS, most of the policies are, genuine barring a few. Insurance companies, discovering the fake policies, might cancel them and refuse to pay.

To find:The actions of the company RL are ethical.