Important note: Information in this article was accurate in 1985. The state of the art may have changed since the publication date.
The New York Times - December 21, 1985
More than 1,200 people have purchased the policies so far, according to James C. Hotinger, a vice president of the company, which is based in Santa Monica, "The majority are probably male homosexuals," Mr. Hotinger said, adding that he had no way of being sure, since the application does not ask about sexual orientation. The application does, however, ask if people have had various symptoms of AIDS, such as swollen lymph glands or severe weight loss.
The company appears to be relatively alone now in offering AIDS insurance. Coastal is a 29-year-old, privately held company that received more than $40 million in premiums last year for life, health, automobile and other kinds of insurance. A Dallas insurer, the Provident American Insurance Company, also offered such coverage, but suspended it in June, saying there was not enough interest.
How can Coastal offer AIDS insurance when so many insurance companies are running the other way? Mr. Hotinger insists that the program is actuarially - and economically - sound.
One reason lies in the payments plan. A policy provides for maximum reimbursement of medical costs of $69,000 in the first year and $78,000 in subsequent years. But those figures are reached only if the patient spends every day of the year in the hospital. In fact, Mr. Hotinger believes, the payout is likely to be considerably lower because AIDS victims generally do not spend all of their time in institutions.
Coastal also will not pay for AIDS if the disease is diagnosed within 90 days of purchasing the insurance. Four claims have been filed so far, and three have been denied because symptoms were present when the insurance was purchased, Mr. Hotinger said. The fourth was being evaluated and appeared sound, he said.
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