What are life settlements and viatical settlements and how do they differ?
Life settlements are a fairly new trend in the life insurance industry. A life settlement can generally be defined as the purchase of an existing life insurance policy by a third party for investment purposes. The purpose for the insured is to receive more cash than he or she would if surrendering the policy. A viatical settlement is when an insured, with a life expectancy of less than two years, needs cash and sells the policy to a third party. The two types of settlement are similar, but with a life settlement the insured is typically in much better health. Berkshire Hathaway and AIG are two major players in this marketplace, and they are drawn to these investment opportunities because they believe the policies provide high yields and fairly low levels of risk. How can a business benefit from key-person insurance? Generally, key-person insurance is purchased by a business to cover a premature death of a business owner, and the proceeds of the policy can be used to pay for a search to
