Leslie Scism and Mark Maremont writing for the Wall Street Journal detail the story of the late Germain Tomlinson who was found dead in her bathtub at the age of 74 "fully clothed from an evening out at a martini bar, high heels still on her feet." Her "social companion," 36-year old JB Carlson had a $15 million life insurance policy on her life, payable to his compnay. Read the article here.
"The dispute over the $15 million policy is a dramatic example of a larger controversy roiling the life-insurance industry over "stranger-originated" policies. In recent years, insurance agents, hedge funds and other investors have induced thousands of elderly people to take out giant policies. Investors then buy these policies, pay the premiums, and collect when the insured dies.
Insurers argue the practice violates "insurable interest" laws that require a buyer to be a relative, employer or someone else more interested in having the insured person alive than dead. U.S. courts long have supported this concept, including a 1911 ruling in which Supreme Court Justice Oliver Wendell Holmes Jr. wrote: "A contract of insurance upon a life in which the insured has no interest is a pure wager that gives the insured a sinister counter interest in having the life come to an end."