The hedge fund manager looks for policies with the following traits: 1) The surrender value being offered to the insured individual is relatively low; 2) the ongoing premium payments are also relatively low; and 3) the probability is relatively high that the insured person will die sooner than predicted by standard actuarial methods.
Why would a hedge fund want policy owners to pay them a low premium? Don’t you want the policy owners to pay you a high premium?
The HF are going to buy the person out.
The may surrender it (But if this wasa good deal the erson would have done it themselves) but more likely they will continue to pay premuims and collect when the person karks it. So they want low premiums.
Excuse the details which don’t seem nice.
A middle aged person takes out life insurance. They are active and well educated with a low risk job. They have low premiums.
They get a illness or have an acident and are given 6 months to live.
The HF pays them out now so they can spend the cash on health care or trip to space.
HF continues to pay premiums and collects when person dies.
“Karks it” : I will have remember this euphemism. 
I always hear ads on CNBC offering to buy life insurance policies.
Sitting on a gold mine