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For what reason would a terminally-ill person choose to viaticate a life insurance policy?

A terminal illness or catastrophic life threatening illness not only deprives a person of the ability to work and earn income to take care of themselves, but it also rapidly exhausts any savings that may have been put aside. When this happens, a viatical settlement allows a person to:

A survey of sellers revealed that they had used their proceeds for a broad spectrum of different purposes including:

  • continuing the highest quality health care possible.
  • relieving the financial stress concerning bills, rent, or mortgage payments, car payments, and in many instances retiring all of their debts.
  • distributing the proceeds of their viatical settlements to whom they wish: friends, life partners, loved ones,
    spouses, charitable institutions, to name a few.
  • having the peace that comes with knowing the proceeds are distributed according to the seller’s wishes, while allowing the seller to share in the joy of those receiving the gifts.

Every individual will be different when it comes to the use of the proceeds. However, all experience a relief of stress which enables them to live a better quality of life.

Can a person sell only a portion of a policy while maintaining selected benefits for a primary beneficiary?

Yes. The seller may request an irrevocable beneficiary designation for a portion of the proceeds to be assigned to seller's beneficiary or beneficiaries of choice. In this case, upon the death of the seller, the insurance company would pay the benefits directly to the sellers' designated beneficiary(ies).

What types of life insurance policies qualify?

In general, any type of life insurance can be sold: whole life, universal, term as well as all individual and some group policies.

What provisions in a policy could prevent a sale?

A policy must be beyond all contestability and suicide exclusion periods. Additionally, a policy that would not allow for the transfer of ownership to a third party would be impossible to sell. Also, group policies with conversion restrictions would be very difficult to underwrite.

What are the purchasing requirements of viatical settlement funding companies and how much can the seller expect to receive in viatical settlement proceeds for his/her policy?

Each funding company has its own set of underwriting criteria upon which it bases its offers. However, the purchase price paid by a funding company will be based upon the estimated life expectancy of the insured: the shorter the life expectancy, the higher the offer. Important elements of the offer are the required annual premium, the type of policy and rating of the life insurance company and the market rate available on similar investments.

Does the seller continue to pay the premiums after the viatical or senior life settlement sale is complete?

No. Upon completion of the viatical or senior life settlement transaction, the seller's rights and responsibilities for premium payments on the policy will cease.

Does the selling of a policy affect other benefits of the seller such as disability income or health insurance?

As a general rule it does not. However, we encourage each situation to be checked on an individual basis. Means-based assistance, such as Supplemental Social Security Benefits may be affected.

Does the seller have similar benefits available from his/her own insurance company?

In some cases the seller's insurance company may offer accelerated benefits. If the seller qualifies, the insurance company will pay a certain percentage of the total death benefit. Usually, the criterion for an accelerated benefit requires the seller to have a life expectancy of six to twelve months.

Do all viatical or senior life settlement funding companies offer the same net proceeds?

No. Offers will vary as result of the investment company's life expectancy estimate, ratio of premiums to proceeds and other criteria particular to each investment company.

How long does it take a seller to receive the proceeds of a viatical or senior life settlement sale?

Generally, the process takes 4 to 8 weeks, depending on the completeness of the information required.

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