For many cancer patients with a life-threatening diagnosis, a viatical settlement can be one of the greatest sources of financial help.
WHAT TO EXPECT
Viatical settlements are different than other types of financial assistance for cancer patients because they:
- Provide funds quickly, within a matter of weeks.
- Provide large, lump-sum payments.
- There are no restrictions on using the money.
- It reduces monthly bills by eliminating insurance payments.
VIATICAL SETTLEMENTS DEFINED
A viatical settlement is an arrangement in which someone with a life-threatening illness sells his or her life insurance policy for cash.
Best of all, under federal law, viatical settlements are non-taxable and can typically be used for anything you want (seriously, just about anything, even a trip to Rome or renting a Ferrari for a day!).
WHAT HAPPENS IF MY LIFE INSURANCE POLICY LAPSES?
According to the Life Insurance Settlement Association (LISA), more than 710,000 policies are lapsed or surrendered each year. As a direct result, a staggering seven billion dollars in combined face value is lapsed each year by American seniors over the age of 70.
Once a life insurance plan lapses, the life insurance company is not under any legal obligation to pay the beneficiaries if an insured person passes away. The reinstatement process requires good health with proof of insurability and all missed premiums must be paid to the insurance company.
Essentially, the viatical settlement process allows late-stage cancer patients to explore all options before lapsing the life insurance policy because of unaffordable premiums.
Even with a decision to keep the policy, knowing the value of the policy on the open market gives the patient options and financial peace of mind.