Reference no: EM132350090
James Stilton is the chief executive officer (CEO) of RightLiving, Inc., a company that buys life insurance policies at a discount from terminally ill persons and sells the policies to investors. RightLiving pays the terminally ill patients a percentage of the future death benefit (usually 65 percent) and then sells the policies to investors for 85 percent of the value of the future benefit. The patients receive the cash to use for medical and other expenses, the investors are "guaranteed" a positive return on their investment, and RightLiving profits on the difference between the purchase and sale prices. Stilton is aware that some sick patients may obtain insurance policies through fraud (by not revealing the illness on the insurance application). An insurance company that discovers such fraud will cancel the policy and refuse to pay. Stilton believes that most of the policies he has purchased are legitimate, but he knows that some probably are not. Using the information presented in this chapter, answer the following questions.
1. Would a person who adheres to the principle of rights consider it ethical for Stilton not to disclose the potential risk of cancellation to investors? Why or why not?
2. Using Immanuel Kant's categorical imperative, are the actions of RightLiving ethical? Why or why not?
3. Under the theory of utilitarianism, are Stilton's actions ethical? Why or why not? Will it make a difference in this analysis if most of the policies are legitimate and valid rather than fraudulently procured and void?
4. Using the Business Process PragmatismTM steps discussed in this chapter, discuss the decision process Stilton should use in deciding whether to disclose the risk of fraudulent policies to potential investors.