AIDS drugs bring change for viatical companies
By ELIZABETH WEILL-GREENBERG
Thursday, April 13, 2006
When Poz magazine founder Sean Strub sold his life insurance policy in 1995, he didn’t think he had much time left.
In the 1990s viatical companies sprung up to buy life insurance policies from people with AIDS and other terminal illnesses. Because AIDS was still considered a death sentence, the investors figured they were in line for a windfall.
“However, as time has passed, it is now clear that many people with HIV who viaticated their insurance policies are way ahead of the game, as they did not die on schedule,” said Strub, who is HIV-positive, in an e-mail interview.” I fall into that category.”
While Strub has had no trouble with his viatical company, a woman with AIDS in Pennsylvania has sued hers, Life Partners, because it has reportedly refused to continue to pay for her medical care. When M. Smith signed up with Life Partners in 1994, she was given only two years to live. She sold her $150,000 policy for $90,000 and was promised that Life Partners would pay her health and life insurance premiums until she died.
“Viatical became a wonderful investment when AIDS was predictably fatal,” said Gloria Grening Wolk, a consumer advocate and author of the book, “Cash for the Final Days: A Financial Guide for the Terminally Ill and their Advisors.”
Because of people like Strub and Smith, the viatical industry has switched its target market, and advertising campaigns, away from gays and HIV-positive people and toward the life settlement business, which is buying life insurance policies from healthy people 65 years old and older who are typically wealthy.
“I’m always a little nervous that one of the investors who purchased some of my life insurance might get a bit anxious to collect the death benefit — might make a good plot for a movie!” joked Strub. “One of my policies was resold to a group of individual investors in suburban Cleveland. It is odd for me to think that they are there losing money every day I continue to draw breath.”
In 1995 about seven viatical companies advertised in Poz magazine, said Megan Strub, the magazine’s publisher. Now only one still advertises, she said.
In last week’s issue of the Washington Blade no viatical companies advertised. More than a decade ago, it was a different story. In the April 9, 1993, issue of the Blade, there were five ads. One ad shows two well-dressed men beneath the text: “If you have AIDS and money is a problem… The Access Program purchases life insurance policies from individuals with AIDS, providing the money they needed for living today—quickly and easily.”
An ad for the Estate Trust Company promises “immediate cash” and “peace of mind” to “PWA’s terminal illness.” Another ad echoes that urgency and notes, “We put time on your side.”
Rather than viatical ads, readers of gay newspapers are more likely to find ads for AIDS drugs, said Ronda Goldfein, executive director of the AIDS Law Project of Pennsylvania, which is working on the Smith case.
“It’s no longer you might as well sell because you don’t have a future,” she said. “Instead, Sustiva is your future.”
A new life
In 1996, after protease inhibitors were announced at an AIDS conference in Vancouver, Dignity Partners, a viatical company, stopped buying insurance from people with AIDS and HIV.
“Everything was going smoothly until people stopped dying,” states a publication on viaticals by the AIDS Legal Referral Panel. “Investors anticipated a fast profit but were left with a return that could be decades away.”
The viatical industry dried up gradually between 1996 and 2000, as medications changed AIDS into a manageable, chronic illness, said Doug Head of the Life Insurance Settlement Association.
“AIDS especially brought to the marketplace people who were seeking funds for medical care,” he said. “People needed money before they were dead.”
The industry has changed as much as AIDS has changed since the 1980s, he said. There are about 50 viatical companies now from about 100 companies in the mid- to late-1990s, he said. The companies that didn’t switch to the life settlement business collapsed, he said.
“Fast forward to 2000, the viatical industry goes into the Dumpster,” he said.
In the 1990s, smaller policies worth between $5,000 to $200,000 were typically sold, he said. But as the industry has moved away from people with terminal illness and toward wealthy senior citizens, the policies sold now are no less than $200,000, he said.
“In the early days it was strictly AIDS patients,” said Bill Crust, founder and president of Viatical Settlements. “[But] two, three years ago we didn’t have anybody who would look at AIDS. They’re always coming up with another cocktail. God bless. I’m so glad to be pushed out of the business.”
But some worry that the industry has abandoned people who are terminally ill. While there were abuses, many people did benefit, they say.
“The industry made available hundreds of millions of dollars, maybe more than a billion, to people with HIV and enabled them to open businesses, realize life dreams, pay for health care and other expenses,” said Strub.”There was and is abuse, to be sure, but on the whole, I think people with HIV have gotten the better end of the deal.”
Wolk Grening said that terminally ill patients now can’t get the money they need. In the 1990s, people with AIDS and other terminal illnesses used the money from viatical settlements to buy medications or to buy a car to get to the doctor.
“This industry doesn’t exist for the same purpose anymore,” she said. “They’re not providing the benefit to people who need it.”
