American Life Fund > Is it Legal to Sell a Life Insurance Policy as Funding For Cancer Patients?

Is it Legal to Sell a Life Insurance Policy as Funding For Cancer Patients?

Finding funding for cancer patients can be challenging, but one option you may have heard about is selling your life insurance policy. Wondering if that’s legal? The short answer is yes. It is legal to sell your life insurance policy. But to help you understand how it works, here’s a look at the specifics.


The History of Viatical Settlements as Funding for Cancer Patients

When you sell your life insurance policy to get funding for cancer patients, it is called a viatical settlement. Although many people are just hearing about these settlements for the first time, they have actually been around in some form for over 100 years. In fact, selling life insurance policies was declared to be legal during a 1911 Supreme Court case.

At that time, however, life insurance was relatively rare. Over the next 80 years, life insurance policies became increasingly popular, and in the 1980s, the viatical settlement industry was born during the AIDS crisis. Patients who were facing death and in need of extensive medical care sold their policies so that they could afford treatment and living expenses. Now, however, AIDS and HIV treatment has improved to the extent that most people with these conditions are able to live long and healthy lives. As a result, the industry has shifted to help people who need funding for cancer patients.


The Case of Grigsby V. Russell

In the 1911 case of Grigsby v Russell, Dr. Grigsby offered to accept his patient’s life insurance policy in lieu of payment. The patient, John C. Burchard agreed and handed over the policy to the doctor. In exchange for the ability to redeem the policy after the patient’s death, the doctor agreed to make the monthly payments on the plan.

However, after Burchard’s death, the executor of his estate (Russell) claimed that the doctor didn’t have a right to the insurance policy. The case went all the way to the Supreme Court, and the court ruled that the arrangement was absolutely fine from a legal perspective.

Justice Oliver Wendell Holmes delivered the decision in this case, and he stated that life insurance is an asset. When you own an asset, you have the right to sell it as you see fit, and that right extends to life insurance.


Additional Information About Viatical Settlements

Many patients choose a viatical settlement over other forms of financial assistance because they can receive a larger sum of money, sometimes up to 70% of the value of their life insurance policy. There are also no restrictions on how you can use this money. It can be applied to medical bills as well as ordinary living expenses such as rent or utilities, or even to fund a vacation with family and friends.

If you or a loved one has been diagnosed with cancer, you’re likely facing large medical bills. To help offset your costs, you may want to look into using a viatical settlement as funding for cancer patients. To learn about options and to get an estimate on how much your policy may be worth, contact us today at American Life Fund.