Definition of Viatical Settlement
When someone is diagnosed with an illness and are given a certain amount of time to live, many decisions have to be made. Most of them surround the ending quality of life, which may include paying for health care costs, bills and how to enjoy their last days. One way for a person to alleviate the stress of having money for those decisions is by engaging in a viatical settlement.
Other People Are Reading
-
The Facts
-
A viatical settlement is an arrangement in which someone with a terminal disease sells his life insurance policy at a discount from its face value for ready cash. An insured may sell their policy to a viatical settlement company, a broker who specializes in viaticals, or to a lesser extent, family and friends.
Benefits
-
The terminally ill patient can use the money to take care of a number of things. Health costs can get expensive. Bills that are piling up while the patient is in care can be taken care of. The insured can also use the money to live out the remainder of their life however he chooses. On the other side, the buyers in the settlement make money by purchasing the policy at a discounted price. They get the policies full face value once the insured passes.
-
Considerations
-
Money is the sole reason this type of agreement would be executed. The insured changes the beneficiary designation from their loved one to a buying party. The buyer then releases a sum agreed to by the insured after the legal work is done. Since this is a business, many viatical companies have been reluctant to buy policies of lesser amounts. A policy for $10,000 or less is a harder sell to big businesses. Family members or friends can purchase your life insurance if they have the funds to do so.
Time Frame
-
A person is diagnosed as terminally ill if their life expectancy is less than six months. However, there is no exact science as to accurately predict someone's death. Therefore, the buyers in a viatical settlement look to gauge prices based on a doctor's estimation. The payout to the insured is higher if the projection is imminent, while the sum is lower if it is longer.
Effects
-
For those who hear what a viatical settlement is for the first time, they might be appalled. They focus solely on someone making a profit off someone's death. They don't look at the benefits that come from such an arrangement. The investors and companies involved are providing patients with means that otherwise would be tied up until their death.
-
