What is a Viatical Settlement?

Oct 13, 2020 12:00:00 PM / by LISA

viatical settlement

Surprisingly, viatical settlements are not as well-known as they should be. Many people, despite possibly benefitting from the choice to arrange for a viatical settlement, don’t know about them or discuss them. Nevertheless, a viatical settlement is a lucrative arrangement for people suffering from a terminal disease. These people are able to sell their life insurance policy at discounted rates and obtain cash, which can help with financial hardships or other needs. Buyers cash in the policy’s full amount after the death of its original owner. While distinct from life settlements, viatical settlements are also a useful asset for people in specific situations.

Some individuals argue that this type of settlement is risky because you never know its return rate. After all, it may be impossible to determine when a policyholder will die. Investing in a viatical settlement means that you are surmising death. So, the policy becomes cheaper and cheaper the longer the applicant lives. This is why many consider this settlement to be one of the most morbid investment options one can choose.

Viatical Settlements Provide Financial Peace of Mind

Many people are unsure of what viatical settlements are and how they can provide peace of mind. Selling a life insurance policy improves a policyholder’s financial situation, especially when dealing with life-threatening illnesses and other hardships.

Are you having problems paying bills, including bills for medical care, or struggling to pay insurance premiums through your premium finance loan? Giving up your life insurance policy might be the best option to relieve your debts and financial obligations. It will also provide you, as a policyholder, with more time to focus on other priorities in life. 

Who Can Qualify for Viatical Settlements

According to the National Association of Insurance Commissioners, people with chronic and life-threatening illnesses can qualify for viatical life settlements. However, you must have a policy with a well-reputed company to qualify for this settlement. You can sell your group, universal, term, or whole policy without any hassle. You will find numerous companies that will help you through the viatical settlement contract, and it is recommended to work with one to ensure the maximum payout for your policy. 

Almost every settlement service considers numerous factors, such as the disease type, its stage, insurance premiums, the face value of your policy, and other pertinent information. They analyze these factors when calculating the amount the patient will receive in their viatical settlement contract. The viatical settlement provider will inform you about the figure after calculating it.

For those who don’t know, the value that settlement providers offer clients in a viatical settlement depends on the particular case. In some cases, it could be as high as seventy to eighty percent. Your settlement provider will send you the lump sum amount immediately. You will not have to wait for the insurance provider to give them the policy’s expected death benefit. The accelerated death benefit is quite beneficial for people suffering from life-threatening illnesses. 

How to Use Viatical Settlement Payments

What’s most impressive about viatical settlements is that applicants don’t have to worry about cash payment restrictions. Once you receive your funds, you can utilize them as you please. Let us look at some popular ways people use their settlement payments:

  • Paying for tuition or saving for college funds.
  • Clearing home mortgages.
  • Minimizing other debts.
  • Reimbursing friends and family members.
  • Getting extra help, such as childcare and cleaning. 
  • Paying for hospice or home care.
  • Paying for travel to receive medical attention.
  • Making payments for experimental treatments that your insurance does not cover.
  • Clearing medical bills.
  • Going for family trips.
  • Covering their wages to take time off or quitting their jobs.

You can do several other things with your viatical settlement payments, which is why many consider it one of the best settlements for payouts. For help with finding professionals to assist you in this process, contact the professionals at LISA, the Life Insurance Settlement Association. We’ll be happy to help.

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LISA

Written by LISA