How Does a Viatical Settlement Work?
Because viatical settlements depend upon the type and amount of the policy, as well as the owner’s age and medical condition, the owner first provides this information, including the policy and premium information, as well as medical records and releases. Typically, a medical expert then reviews medical information and provides a life expectancy for the owner. The amount paid depends upon many things, such as the policy owner’s age, the owner’s health, and economic conditions and the rating of the insurance company purchasing the policy. If the seller and buyer agree upon the amount to be paid, they execute a contract and change the policy beneficiary. Payment is then issued. What Should Sellers Consider? There are both advantages and disadvantages to selling life insurance policies in viatical settlements. The most obvious advantage is the immediate use of income from the sale proceeds. Additionally, sellers who are terminally or chronically ill can exclude from their taxable income a
