An Indiana family got the go-ahead to proceed with its civil lawsuit against AIG (American International Group), on charges the insurer was complicit in a "scheme" to let investors buy life insurance on older people as speculative bets.  The case centers around a $15 million "stranger-originated life insurance" policy on Germain "Suzy" Tomlinson, taken out by an Indianapolis entreneur whose marketing firm is named as the beneficiary. 

BTW, Ms. Tomlinson drowned, fully clothed, in her bathtub in 2008.

Tomisue Hilbert, Ms. Tomlinson's daughter, alleges that the entrepreneur duped her elderly mother into naming his firm as beneficiary, while AIG, in its eagerness to book revenue, "turned a blind eye" to red flags in the application process that raised doubts about Ms. Tomlinson's need for such a large policy.

Ms. Hilbert said the evidence will show that her mother was a victim of fraud by people "who expected to receive huge financial gains. ... These insurance schemes depend on the participation of a complicit insurance company.

    Insurer v. Beneficiary.   This case is one of the highest profile of several hundred pending nationally, as families, insurers and investors sort out a "non-collapsed boom in the secondary market for life policies," the WSJournal notes.  In such cases, agents and investors contend that the insurers' own managers welcomed the business to boost their compensation, and that they should have to honor the policies.  Here, AIG is seeking to have the policy declared void, alleging fraud in the 2006 application process;  the investor maintains the policy was lawfully obtained and AIG should pay the proceeds.  [WSJournal, 10/6][