“Why certainly, we’ll be happy to paint a target on your baby’s back, no questions asked—just keep up with the premiums!”
Three insurance companies allowed a Manassas, Virginia father with a suspicious history of violent family deaths to take out life insurance on his 15-month-old son in the astounding amount of more than $500,000. Now the boy, Prince McLeod Ram, is dead, allegedly drowned by the beneficiary of those policies, his dad, Joaquin Rams. He’s under arrest; the companies are unlikely to have to pay out a cent.
I suppose that makes this a good business deal for them.
For the dead kid, not so much.
Despicable, irresponsible, venal and willfully ignorant. Any 12 year old who’s written a book report on a detective novel or seen an old repeat of “Murder, She Wrote” could guess the only plausible reason why any parent would take out such a large life insurance policy on a child. Yet the insurance professionals at MassMutual,Gerber Life Insurance Co. and Globe Life and Accident Insurance Co. never saw anything sinister, suspicious or odd about a father (who, we have learned, previously lost a wife to “suicide” and a girl friend to gunfire) who wants to make sure he becomes rich if, heaven forbid, any thing should happen to his son. Is this conceivable? Or are they just trained not to think about such things as the “evil that lurks in the hearts of men?” Hey, if a someone wants to pay you to hang a bright, red “Kill Me!” sign on his kid, who are you to object, right guys? You assess risk, but only your risk, true? Increasing the risk to a helpless child’s life isn’t really part of the calculation, am I correct?
I know: “Jack, you are condemning a whole industry as unethical because of three bad apples!” No, I’m condemning a whole industry because it didn’t have clear ethics standards that would state that such insurance policies are inherently dangerous unethical, like the Victorian tontines, unless there are unusual circumstance involved—and I can’t think of what those might be. [ All right, if a child is a mega-performing star and the chief family bread-winner, a life insurance policy makes sense.] An ethical insurance industry would install a rule that says that if you want to insure the life of a child for a large amount, your insurance company will report that policy to law enforcement authorities, and the industry will lobby for a statute that mandates such a process.
An ethical industry wouldn’t tolerate members that are happy to be part of a murder scheme, as long as they make money in the end.
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Spark, Graphic and Source: Washington Post
Source: Huffington Post
Ethics Alarms 
Insurance companies are supposed to include the risk of moral hazards as part of the risk. For example, most insurance companies would not insure people for $50,000/yr in lost income if the person makes only $20,000. (Disability policies typically insure for more than what a person makes, but only more to the extent necessary to cover medical expenses associated with an acquired disability.)
I generally do not ascribe to malfeasance what I can ascribe to gross negligence.
1. Yes, but that’s because your example risks the insurance company’s money. That’s obvious. What’s “moral” about that judgment?
2. Neither do I, but this is both, and equally obviously.
May I offer “an unusual circumstance?” I have four sons and earn a considerable amount of money working a very stressful job. If something were to happen to any of them, it would devastate us all. Having a life insurance policy on each with a value that would allow me to take months (?years?)off and provide for each of the surviving brother’s education would be the slightest light in a very dark event that would certainly stress my family to its very limits. Exactly what life insurance is for. I am thankful I can participate in this industry’s product.
Uh, right. And as long as the police are alerted, just in case that stress relief option becomes too tempting, I could live with the product being available. Still—yechhh.
Wow. Really? Did you just accuse me of being tempted to kill one of my children? You need to step back and think about what kind of world you want to live in. Is everyone suspect? Are we all guilty? AND how on earth would having a government agency making me a suspect prevent me from bringing harm if I were insane enough to harm one of my own children? Take a breather a this one, Jack. Normally I agree with on most of what you write.
I commented on what you wrote. I don’t know it you even have any children. Your rationale for taking out a $500,000 insurance policy on a child is troubling, or would be. I want the money to relieve stress? Money always relieves stress. I understand what you intended, but there is no way that wouldn’t raise legitimate suspicions.
Where did I write “to relieve stress?” I wrote that my job was stressful and the implication was that losing a child would make it likely that I would possibly need to quit it. (Admittedly poorly stated. but i am unsure it detracts from my point) Again, you slight having bought life insurance. What do think the concept of life insurance is for if not relieving post death “stresses” on surviving beneficiaries? The rationale is appropriate in my example. Your default situation of having the “thought police” look in to me is far more troubling than a person buying insurance on a loved one. Is it the amount of money that is troubling? What level would be “below suspicion” in your estimate?
Where? How about: “Having a life insurance policy on each with a value that would allow me to take months (?years?)off and provide for each of the surviving brother’s education would be the slightest light in a very dark event that would certainly stress my family to its very limits.” If I misunderstood, I apologize. That’s how I read it: “This amount would allow me to take months off as relief for a stressful event.” My point was that what are stressful events are subjective, and I’m not sure that would qualify, as a general proposition, as a valid exception.
But Gunter is saying that the very death that brings the insurance benefit is the stressful event that the money would help them deal with. Children die, insured or not. When they do it puts a devastating emotional burden on the family. I’m reading him as saying that if something like that were to happen, a significant insurance benefit would allow the family to ease off of other considerations such as how to pay bills, how to perform at work, how to buy food- and handle their grief uninterrupted.
He’s not just saying that any old stressful event (oh no! my transmission blew up!) would be salved by the child’s life insurance money. He’s saying that if your child died, and a week later your transmission blew, you’re not going to feel one bit like dealing with that mess too.
My problem is that this is a self-defining, circular plan, at least potentially. If the money one gets to relieve the stress of a potential tragedy is sufficiently large to ameliorate the tragedy and make it a good trade—I’ll take a lot of stress for $500, 000—then the insurance increases the insured’s willingness to endure the stressful result. “Hey, go ahead, let the little tyke play in traffic. He’s insured!”
I think that’s the key- for your average person, it’s still not a GOOD trade to lose a child with a half million insurance to follow. It’s just less of a terrible one because you can avoid expectations to go to work and be chipper, without worrying about how you’ll keep the lights on. When I got a nicer car I got full coverage but still drive defensively, I have health insurance but try to avoid injury, my parents’ homeowners insurance would cover it but dad still cut down the dead limb that might have fallen on our garage. You don’t get insurance hoping for the money, you get it because sometimes bad things happen and getting the money helps you deal with them.
Of course, that’s all based on a rational actor- I can’t believe there were no flags raised by his actions. Still, though, the system by nature has to be based around the average rational person.
Following that reasoning, though, $500,000 would be disproportionate to the need and grounds for suspicion.
If the life insurance policies are whole life insurance policies, then they might make sense. If I had a child and I bought him or her insurance at a young age that he or she could carry on into adulthood, then I might get a good deal, given that the child is unlikely to die in his or her first few years. I will also lock in my child’s future insurability if he or she developed a medical condition.
Also, at least in Canada, whole life policies can also be used as tax-efficient savings vehicles.
The policy already has provisions to prevent people who kill their children from benefiting. They just don’t pay them. Of course, if someone is both ignorant of how insurance works and evil, they might still try, but people who are both stupid and evil are hard to stop.
My parents took out early whole life insurance policies when we were kids for exactly that reason. Good point.
“People who are both stupid and evil are hard to stop”
You know, I don’t think I’ve heard that worded quite so perfectly before. That may be one for my Facebook “favorite quotes”…
I’m glad you liked it.
Sad! Thanks for sharing.
I may use this as a thought experiment in my ethics class to see how my students feel about it.