During the summer of 2020, at the onset of the Covid pandemic, the documentary director Matt Nadel was back home in Boca Raton, Florida. He remembers one particular evening walk that he took with his father, Phil, as they weathered out those early months.

As they strode through the neighborhood, Nadel, now 26, said that the prospect of a vaccine was exciting, but the idea of pharmaceutical executives profiting off a devastating virus left him feeling uneasy. Phil grew concerned by the complex ethical predicament that his son laid out, and Nadel could quickly tell that his father was acting strangely.

“I think I have to tell you something,” Phil said mid-walk, before explaining that in the early days of the HIV/Aids epidemic he had invested in what are known as, “viatical settlements”. Phil would buy the life insurance policies of people dying of Aids, often with just weeks or months to live, for a portion of the plan’s value in cash. For many, it afforded them the ability to pay for food, rent and hospital bills as debilitating illness left them unable to work. For others, it was their chance to blow the funds on travel or experiences with the limited time they had left.

“I was thrown for a total loop,” Nadel told the Guardian. “He had been part of this industry, and that the profits he made from it had helped to bankroll my childhood.”

For Nadel, a gay film-maker, it sent him into a “spiral” that did not begin with the desire to make a movie. “I understand myself as somebody who stands on the shoulders of Aids activists who use their bodies to create a world in which I can be healthy and take my PrEP [pre-exposure prophylaxis] every morning, and also in which I can be relatively free as a gay man,” he said. “So many of the advances in gay rights came from the visibility of the Aids era, and here I was learning that my existence and privilege was hinged in some way on those same people dying.”

As he began investigating the muddied history of viatical settlements throughout the peak of the Aids crisis, the outlines of a film started to emerge. The result is Nadel’s Oscar-shortlisted documentary short, Cashing Out, which tells the story of how a cottage industry of buying up life insurance policies was both ghoulish and liberating in equal measure.

One of the film’s main characters, Scott Page, inadvertently configured an early viatical settlement when his partner, Greg, who was living with Aids, became progressively sick.

Short on cash, but armed with a robust life insurance policy, Page ran an advertisement in a local paper to see if someone could buy Greg’s plan in exchange for an advance. When a private investor reached out, the couple struck up a “loose agreement” that allowed Greg to live out the time he had left with some financial security. The payout meant they could also move into a house and get a golden retriever.

As dozens of old pictures flash across the screen, you see an idyllic slideshow of two people with a rich life: fixing up their home, lying by the beach and laughing with friends. But it’s also a bittersweet record of Greg’s final months. Page ultimately remembers how the money in-hand was “absolutely transformative” for his late boyfriend, as he “saw the stress leave his body”.

The absurdity of getting a cash advance on your death, however, wasn’t lost on Page. When he saw the peace and freedom it gave Greg before he died, he turned his energy into becoming a viatical broker for scores of other gay men – often without loved ones by their bedside – who were dying of an illness that much of the federal government had shrouded in shame and prejudice. When Page started to approach banks and credit unions about getting involved in the investment scheme, they were incredulous and insisted that payouts should be for the families of the deceased. For Page, their arguments weren’t rooted in reality. “These people’s families have walked away from them,” he recalls in the documentary.

It meant that private individuals made up most of the initial investor network when it came to buying up policies. They were provided a morbid ledger. On one side, the value of a policy and the dollar amount needed to buy it outright, on the other, the T-cell count of a person living with HIV/Aids and their life expectancy. Often, it served as an assurance that a payout was inevitable. The sicker the policyholder, the quicker the windfall for the investor. Soon, institutions realized that these small-time individual investors were making a lot of money, and changed their tune.

Nadel constructs his documentary like a deeply reported magazine story: gripping anecdotes, a rich – albeit macabre – historical backdrop, and varied voices who show that while some people benefited from viatical settlements, there were so many who were left out of the conversation altogether.

DeeDee Chamblee, a trailblazing advocate and activist reminds us that for Black trans women living with Aids – who often didn’t have jobs that provided life insurance policies – a viatical settlement was something they could only dream about.

One of the most harrowing moments of the documentary comes when Chamblee remembers suffering through her illness, with only three T-cells left, and how she would fantasize about getting a payout to live out her final days in peace. “I could go to the beach, and I could stay there until this thing is through,” she reminisces. “That was not a reality at all,” she adds, expecting to end up buried in a wooden box in a “potter’s field” with other unclaimed bodies.

Chamblee’s testimony is a jolting reminder that her experience living with Aids is a world away from the white, gay men who had policies to sell. In making Cashing Out, Nadel realized the most marginalized, particularly trans sex workers of color, aren’t “afforded a shred of basic dignity when their death is imminent”.

But by the late 1990s, significant developments in antiretroviral therapy meant that HIV-positive people started living longer, defying the odds and outliving the predictions that viatical investors were initially promised. “It was going great, until people didn’t die all the time,” Page says, with a glint of karmic joy in his eyes.

Eventually, those betting on death stopped cashing in so easily. Instead, they found themselves stuck paying premiums on policies that would never pay out. “I think they banked on that not being an urgent enough question for our world to answer,” Nadel said. “Then they were angered when the activists from Act Up successfully pushed the government to develop and release drugs quickly … anybody who invested their whole retirement in viaticals was making a really bad investment decision, and that is no one’s fault but their own.”

Nadel filmed interviews with his subjects – Page, Chamblee and Sean Strub, a long‑term survivor who founded POZ magazine – over the course of a year. Their unfiltered honesty ultimately prompted him to fold in the story of his own father’s investment in viatical settlements. “I just felt like they were submitting themselves so fully to the process,” he said. “And so for me to have a secret about my relationship with this, that I was keeping from the audience, just felt wrong.”

In a recent interview, Nadel said that while his thesis for the film had shifted over time, it now seemed straightforward. “This helped a lot of people, but I’m disgusted that it had to exist,” he said. Modern‑day precarity in accessing healthcare in the US – from the expiration of Covid‑era Obamacare subsidies to the substantial cuts to Medicaid funding projected over the next decade – means Cashing Out can serve as both a historically specific and evergreen indictment of the country’s tenuous social safety net, Nadel said.

“When the government refuses to fulfil its role in taking care of us, we have to come together and find creative ways to take care of each other,” he said. “Illness does not discriminate … so I want to encourage people who watch the film to find their strange bedfellows in the fight for survival.”

• Cashing Out is available to watch on YouTube