Am I eligible for a viatical settlement?
You may be eligible for a viatical settlement if you have an in-force life insurance policy that you’re willing to sell in exchange for a one-time payment. There are companies that specialize in buying life insurance policies from individuals who longer need or want their policies. In such an arrangement, the viatical company becomes the owner and beneficiary of the policy, and the buyer becomes responsible for premium payments. After the sale of the policy, the original owner no longer has any obligations or claims relating to the policy. Once the insured person dies, the viatical company collects the death benefit.
What you will learn:
Does a viatical settlement make sense?
A viatical settlement does not make sense for everyone, but for individuals in certain situations, it could provide a much-needed infusion of cash to help with medical or other expenses. If you have a life insurance policy that you’re sure your beneficiaries will not need to rely on, and you are in need of a lump sum of money, a viatical settlement might be suitable. It’s important to understand that the amount you receive in exchange for your life insurance policy can be significantly less than the policy’s death benefit. You’ll also want to discuss any potential tax implications with your tax advisor.
How is my payout determined?
Under a viatical settlement, your payout is determined by the amount of the policy’s death benefit and your expected lifespan. Generally, the longer you are expected to live, the lower your payout will be. This is because the viatical company will have a longer period during which they will make premium payments on the policy – reducing their profitability. You may be required to have a medical examination in order for the viatical company to estimate your expected lifespan.
Choosing an Accelerated Death Benefit or a Viatical Settlement
Some life insurance policies have an accelerated death benefit, which allows the insured person to receive part of the policy’s death benefit while they are still living. Eligibility is usually reserved for situations where the insured person is suffering from a terminal illness. If you’re in this situation, an accelerated death benefit may be optimal, because you are able to retain ownership of the policy while receiving financial assistance. If your policy does not have an accelerated death benefit, or if it does include one and you’re not eligible to activate it, a viatical settlement may be a better option.
Want to learn more about Viatical Settlements? Contact Magna Life Settlements today or use our Life Settlement Calculator.