There have been “viatical settlements” in the life insurance industry for years. Essentially, an entity looks for existing, in-force life insurance policies that can be purchased from the owners. Their gamble is that the insured person dies (so a claim can be made), sooner rather than later.
The advantage to the policyowner (often the insured person), is that they can get a cash payment before death, as the viatical company will generally pay the cash value of the policy, to acquire the ownership rights.
The purchasing viatical company does an analysis as to whether the insured is likely to die within a certain time frame, kind of reverse underwriting. Possibly they took it too far in this situation.