What are Viatical Settlements?
A. A viatical settlement is an investment contract pursuant to which an investor acquires an interest in the life insurance policy of a terminally ill person – typically an AIDS victim – at a discount of 20 percent or more, depending upon the insured’s life expectancy. When the insured dies, the investor receives the proceeds of the insurance policy. The investor’s profit is the difference between the discounted purchase price paid to the insured and the death benefit collected from the insurer, less transaction costs, premiums paid, and other administrative expenses.
Viatical settlements involve the sale of your life insurance policy for a lump sum cash payment. In a viatical settlement transaction, a person who owns an insurance policy based upon the life of an insured who has been diagnosed with a life-threatening or catastrophic illness or condition, assigns (sells) his/her life insurance policy to a viatical settlement company in exchange for a percentage of the policy’s face value. If approved by the Department and the insured, the viatical settlement company may sell the policy to third party (investor).
A viatical settlement, also known as a life settlement, is the sale of the benefits of a life insurance policy to a third party. The owner of the life insurance policy (called the viator) sells the policy for a percentage of the death benefit. The buyer becomes the new owner and/or beneficiary of the life insurance policy, pays future premiums, and collects the death benefit of the policy when the insured dies. There are two types of viatical settlement companies. The first type buys life insurance policies directly from ill people, using either private funds or money received through the sale of company stock. These companies themselves hold all the rights to the insurance policy and act as the designated beneficiary of the policy. The viatical settlement industry deems these transactions “non-brokered” because the viatical settlement provider purchases the policies directly. Investors participate by being stockholders in the viatical settlement company. The second type of viatical se
People want to protect their families from incurring debt due to medical or funeral expenses, and many people also hope to leave some money for their children or grandchildren when they pass away. However, there are times when people need to accept cash settlements in lieu of their life insurance policies to take care of their own needs. There are different types of settlements, such as cash life, senior settlements, and viatical settlements. Cash Life is probably the most readily recognized term, and this type of program is designed for people who are only anticipated to live fourteen years or less and have a policy that is worth at least $100,000.00. Senior Settlements are obviously for senior citizens, specifically, people over sixty-five who have health problems and have policies worth over $100,000.00. Viatical Settlements are very different from these. The age of the policyholder is not as relevant as the person’s health and life expectancy. Viatical Settlements are intended for
A viatical settlement is where an investor purchases the life insurance policy from a terminally ill policyholder at a sum less than the death benefit written. There could be a number of reasons that the policyholder may decide to look into viatical settlements. It could be that due to the increasing costs of medical care, they are finding it a burden keeping up with the premiums. A viatical life settlement company brings the investor and policyholder together and gives the person the opportunity of receiving a cash settlement that they otherwise would not have received. From the investor’s standpoint, viatical settlements can be a risky investment. If the policyholder dies before they are expected then the investor will receive a greater return on their investment. However, if they live longer than expected then the return will be lower. This type of cash settlement is certainly not for everyone, since it is possible if the person lives long enough, for the investor to lose part of th
