RightLiving Inc Actions Categorical Imperative Questions

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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 might obtain

insurance policies through fraud (by not revealing the illness on the insurance application).

Insurance companies that discover this 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?

If Stilton was adhering to the principle of rights, he would disclose that there is a possibility that

some insurance policies could result in a cancellation due to fraud. The principle of rights or

also known as, “rights theory” states, “that the key factor in determining whether a business

decision is ethical is how that decision affects the rights of others” (Cross & Miller, 2018, pg.

50). In this case, Stilton is being unethical because he is not disclosing risks such as, some

insurance policies being fraudulent and the consequences that come along. Additionally, the

basic fundamental rights include, life, freedom and the pursuit of happiness. However, in this

case, Stilton has taken away the freedom from his investors because he is not disclosing this

information. Ultimately, not allowing his investors to decide whether or not they would want to

invest in RightLiving, Inc.

2. Using Immanuel Kant’s categorical imperative, are the actions of RightLiving, Inc.,

ethical? Why or why not?

Based upon Immanuel Kant’s, categorical imperative, the actions of RightLiving, Inc. are

ethical. According to Kant, “when a business makes unethical decisions, it often rationalizes its

action by saying that the company is “just one small spart” of the problem or that its decision has

had “only a small impact”” (Cross & Miller, 2018, pg. 50). The overall purpose for RightLiving,

Inc. is to provide cash for those terminally ill patients so that they are able to use it for medical or

other expenses. Stilton is ultimately still aiding these people who need help however, he is

willing to take the risk of having those fraudulent policies. In all essence, the purpose of

RightLiving, Inc. is far greater than stumbling upon fraudulent policies that may have a small

impact on the company.

3. Under utilitarianism, are Stilton’s actions ethical? Why or why not? If most of the

policies are, in fact, legitimate, does this make a difference in your analysis?

Stilton’s actions are ethical under a utilitarian model. In this case, “an action is morally correct,

or “right,” when, among the people it affects, it produces the greatest amount of good for the

greatest number or creates the least amount of harm for the fewest people” (Cross & Miller,

2018, pg. 51). Stilton believes that most of the policies that are being bought are legitimate.

However, it seems like there are case-by-case cancelled policies. This results in the least amount

of harm for those investors. However, it is important to keep in mind that overall, he is

producing the greatest amount of good by helping the terminally ill.

4. Using the IDDR approach, discuss the decision process Stilton should use in deciding

whether to disclose the risk of fraudulent policies to potential investors.

“The systematic approach, “I Desire to Do Right,” helps eliminate various alternatives and

identify the strengths and weaknesses of the remaining alternatives” (Cross & Miller, 2018, pg.

56). This approach comes with different steps to help organize issues.

Step 1: Inquiry

He would need to begin by understanding the problem. In this case, he would need to inquire

about the patients terminally ill condition and validate it by asking the proper questions.

However, since Stilton is aware that there may be some fraudulent policies, he is still willing to

take the risk of having cancelled policies and having an effect on his investors.

Step 2: Discussion

Secondly, once Stilton has identified the patient’s condition, he should consider weighing out the

options on whether it is a legitimate condition or not. To help aid in the legitimacy of the

patient’s illness, he should obtain any medical files to prove the condition. Once he has made

the decision that it is valid, he would still need to consider the risks that may come. In this case,

he would need to think about the affect it would have on the patient. He would also need to

consider his company and his investors. At this point, he should be asking himself questions

such as, is this a legitimate case? Would it be ethical to purchase this policy?

Step 3: Decision

Once Stilton has thoroughly evaluated all of the components, he should implement some kind of

policy with his investor if the policy is to be cancelled. He could come up with a policy that will

“guarantee” a certain percentage of the policy back to the investor.

Step 4: Review

In the end, Stilton should analyze the way he feels once he sells the policy to his investors. If he

does not feel content about selling a certain policy, then that is when he would need to change

the process. He would make a difference by disclosing the possibility of a cancelled policy to his

investors or create a safe plan for his investors if that were to happen. He should also consider

the feedback from his investors to improve his company, RightLiving, Inc.

References:

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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 might obtain insurance policies through fraud (by not revealing the illness on the insurance application). Insurance companies that discover this will cancel the policy and refuse to pay. Stilton believes that most of the policies he has pur ...
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Tags: James Stilton Insurance policies Categorical Imperative Utilitarian model ethical actions