While it appears that there are many questions concerning the conduct of the company (Life Partners) cited in the article, I do respectfully take issue with your comment about the basic concept of viaticals being a "rip off".
Not only do they allow people that need to liquidate their insurance policy a way to extract as much value from it as possible by creating a secondary market for it (just like how the secondary market for individual bonds has improved with more competition over the years), but it also does create an alternative investment option for those seeking diversification.
Would I suggest someone roll over their ENTIRE 401k into them (as apparently some misguided souls did with policies sold by Life Partners)? Obviously not, just like I wouldn't suggest someone roll over their entire 401k into any single investment or single investment type. I personally wouldn't recommend someone invest in a viatical unless they had several million in their portfolio, since it certainly has a different type of "longevity" risk (although completely uncorrelated) that is not found in any other investment or portfolio option.
But the general idea of viaticals does usually yield a decent (5%-12%) return when REASONABLY priced, with TRUE actuarial assumptions.
Basing a review of the entire viatical industry from that article is similar to comparing a mutual fund with crazy high expenses and high sales load from a retail broker (5% load, 2% annual expenses) to a Vanguard mutual fund, and saying that the entire mutual fund industry is a rip-off because they analyzed the retail broker's offering as an example. Sure, there may be many wolves out there, but it doesn't mean that the basic concept is inherently bad - you just have to be very careful and read the fine print.