Insurance Law

Anti-Life Insurance

By The authors are Martin F. Grace and J. Tyler Leverty, professors of insurance and risk management a

A Buckinghamshire man diagnosed with terminal cancer is to collect a second winning payout of £5,000 after betting he would stay alive.

Jon Matthews, 59, from Milton Keynes, was diagnosed with mesothelioma, a cancer linked to asbestos, in 2006 and told he had months to live.

He placed two bets, each with a £100 stake at odds of 50/1, that he would be alive in June 2008 and in June 2009.

A third wager will earn him a further £10,000 if he lives until 1 June 2010.

The widower will collect his second lot of £5,000 winnings on Monday.

via marginal revolution

Perhaps an actuary could comment on the pricing of this contract. 

Note that traditional life insurance is really death insurance (i.e. one insures one?s self against a premature death).  So this contract is true life insurance?

Full post as published by RiskProf on June 03, 2009 (boomark / email).