Life insurance is designed to protect families against the unexpected death of a family member on whom the family relies for its livelihood.
When the AIDS epidemic first struck, young men found they had a short life expectancy. They sold their life insurance policies to obtain cash and allow the purchasers to make money by paying the premiums for only a short period of time because the AIDS victims died quickly. Unfortunately, in the legitimate sale of life policies to provide cash to AIDS victims to pay for their last days on earth criminals saw the purchase of life policies of people who were sure to die quickly as a temptation to defraud insurers for fun and profit.
In U.S. v. Binday, a group of insurance brokers were convicted in the U.S. District Court for the Southern District of New York of conspiracy to commit mail and wire fraud, mail fraud, and wire fraud, and conspiracy to obstruct justice through destruction of records. They appealed, and the U.S. Court of Appeals for the Second Circuit upheld their convictions.
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