Tag: blogs

Accelerated Death Benefit Versus Viatical Settlement: Which Is Best For You?

accelerated death benefitHearing the news that a loved one is facing a terminal diagnosis is stressful for everyone in the family, and unfortunately financial concerns can also come into play along with the prospect of impending loss. What are the options for a terminally ill senior facing mounting medical or care expenses? Can a life insurance policy be leveraged to help meet that need?

There are two different options allow a policyholder to get cash out of a life insurance policy that might not be needed anymore. Both viatical settlements and accelerated death benefits could offer financial relief to families facing a difficult diagnosis, but the two agreements are different in several key ways.

Accelerated Death Benefit

An accelerated death benefit (ADB) is a provision attached to some life insurance policies that allows consumers to borrow against the value of the death benefit in the event of a terminal illness. The ADB, which comes in the form of a cash advance, is generally tax-free if the expected life expectancy of the policyholder is two years or less.

Generally an ADB is laid out as one of the features of a policy when it is originally issued, but according to some experts most insurance companies will consider providing the benefit if the policyholder meets the requirements, even if it wasn’t originally part of the policy. According to a January 2018 article on Investopedia, individuals may be eligible for an ADB if they meet one of the following criteria:

  • Diagnosis of a terminal illness with life expectancy of two years or less
  • Diagnosis of any serious illness that will reduce expected life span
  • Need for an organ transplant because of serious illness
  • Enrollment in hospice care

In most cases, a policyholder who accelerates his or her death benefit to help defray expenses only borrows against part of the policy, leaving a reduced death benefit that is still available for the original beneficiary. For example, if an individual with a $1 million life insurance policy needs funds for health care, he could borrow against half of that policy, receiving an offer of $265,000 cash against $500,000 of life insurance. That would leave $500,000 to go to his beneficiary upon his death.

Viatical Settlement

 A viatical settlement is a type of life settlement, but generally viatical settlements are reserved for those who have been diagnosed with a chronic or terminal illness. A terminally ill person is defined, for tax purposes, as one whose physical condition will be reasonably expected to end in death within twenty-four months of certification. A chronically ill individual is one who has been certified by a healthcare professional with either a substantial physical or cognitive impairment.

In a viatical settlement, a life insurance policy is sold to a third party for a lump sum, and the buyer assumes the premiums and receives the death benefit when the seller dies. The proceeds from a viatical settlement are generally exempt from federal taxation, because the Internal Revenue Service considers the payout to terminally ill individuals to be taxed in the same way as a benefit upon the death of the insured. In the case of someone who is chronically ill, the settlement proceeds can be tax exempt if the funds are used to cover certain health care expenses.

How to Determine Which is Best?

If a terminal illness has caused a financial strain, a life insurance policy can become an asset while the policyholder is still alive, but the individual will need to research the details of his or her policy to determine which type of transaction is better and more profitable for the situation. Sorting out the best path to help provide financial help to a family suffering a health crisis can be stressful, and a trusted advisor could help make sense of the situation and lay out the potential advantages of either path.

The first step, for any individual or their advisor considering the two options, is to determine whether the original policy included an ADB and whether the provider is willing to negotiate one if it isn’t laid out in the original terms. On the other hand, a viatical settlement usually requires documentation of a terminal diagnosis, so if such evidence is not available an accelerated death benefit might be the right choice.

The experts at Magna Life Settlements stand ready to advise anyone who thinks they might be eligible for a viatical settlement and answer any questions about the process involved in the sale. Set up a call with Magna today to ensure the best possible advice for your family through the illness of your loved one.

*Comments provided in this post are for informational purposes only and should not be construed as financial, legal or tax advice, recommendations or solicitations. Please consult your financial, legal or tax professional with questions related to the information presented, or for advice as to whether a life settlement is right for you.

Best Blogs to Inform and Enrich Older Americans

Top Blogs for Seniors

Certainly, there are some in the over-65 demographic who still get their news from traditional newspapers and television newscasts, but the newer media can offer a breadth of perspective and information beyond what one can find through old-school means. Because blogs are accessible to anyone and space on the Internet is unlimited, seniors might be overwhelmed when searching for blogs that are worth their time.

Here are five websites with blogs that provide informative, relevant and entertaining content for seniors:

 

The New Old Age

Any blog published by the New York Times can be trusted for accurate and quality information, and this column by Times writer Paula Span covers everything from changes in Medicare and Social Security to specific medical issues for an aging population to current events like the potential concerns with gun ownership by seniors.

My Itchy Travel Feet

This site, subtitled, “The Baby Boomer’s Guide To Travel,” features detailed articles about domestic and international travel destinations, customized for seniors. For the past decade, seasoned travelers Donna and Alan Hull have chronicled their own adventures and also reported on topics like necessary travel gear for retirees, options for group tours or other organized excursions and the latest online travel deals.

Minding Our Elders

Aimed at caregivers and the seniors they care for, this site explores the challenges and joys of elder care with insight and heart. Founder Carol Bradley Bursack examines everything from caregiver guilt and isolation to ideas for helping seniors preserve their independence and dignity. Recent posts include, “Valentine’s Day: Celebrating When A Loved One Has Dementia” and “Some Risk Is Often the Price of Living, Even for Older Adults.”

Squared Away

Administered by Boston College’s Center for Retirement Research, this blog features articles on the most current financial research that can impact seniors, as well as extensive analysis on everything from retirement trends to new financial products for seniors. With a clean look and a foundation in trusted, academic sources, this blog will help retirees answer a range of personal finance questions.

ElderChicks

A space especially for senior women, this blog provides a space for stories about women living out their retirement years in unique and bold ways, recollections from outside contributors and women-specific insight into current events that impact seniors. The site’s forum is a platform for women to support and inform each other, and the “ElderExperts” section features articles from experts on a range of topics.

These links are provided for your information and convenience only and are not an endorsement by Magna Life Settlements of the content of such linked websites or third parties. Magna Life Settlements has no control over the contents of any linked website and is not responsible for these websites or their content or availability. Magna Life Settlements makes no warranties or representations, express or implied about such linked websites, the third parties they are owned and operated by, the information contained on them or the suitability or quality of any of their products or services.

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