Aren returns on viatical settlements guaranteed?
Viatical companies frequently try to convince investors that an investment in a viatical is “guaranteed” because everybody dies. But that is not the proper way to measure the worth of any investment, even a viatical settlement. What is not guaranteed is the date of death of the insured person (viator). The return on a viatical settlement is completely dependent on when the viator dies. At a minimum, you should expect to have your principal returned with the additional amount promised by the viatical company, but that is hardly the same as saying that your return is guaranteed as of the projected date. The viatical salesperson will ask you how long you want to invest. Your decision determines the amount of return on your investment, but not the rate of return. For example, let’s say you want to invest $10,000 for two years. The company tells you that your return will be $2,280, for an annualized return of 11.4 percent per year. However, if the viator dies in four years, instead of two,
