Morbid thought: I'm surprised there isn't a cottage industry around buying life insurance policies on prison inmates. I bet you could use statistical methods and/or machine learning to profitably predict inmates most likely to die early, given the prison location, staff, the inmate's crime, and other factors.

If you can do it, surely the insurance companies can too, and adjust their premiums accordingly.

Not only morbid but I'd argue morally wrong as well, as this would be betting on peoples lives. It's just as awful as the coliseum just without you being exposed to the blood.

How is this different from life insurance in general?

"Vitality default swaps?" ;-) I'm sure someone on Wall Street is already working on it.

Not specific to inmates, but in general, yes, investors are willing to make money from buying unwanted life insurance policies. http://www.investopedia.com/articles/pf/07/unwanted_policies...

Color me not surprised. There are probably "synthetic collateralized death obligations" as well, though I'm sure they have a different name.

http://www.investopedia.com/terms/s/syntheticcdo.asp