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Viatical Settlements Explained

American Life Fund > Viatical Settlements Explained

Why Do People Need Life Insurance, and What Do They Do With It?

Most people purchase a single policy, or individual policy, from an insurance producer to cover the life of the policy owner and their immediate needs. This often includes wage coverage, and some people may become policyholders of disability or dismemberment benefits as well. This covers them in case of a temporary or permanent injury preventing them from working, and they may be eligible for government benefits as well. Policies may include family riders or conversion rights for the owner of a policy to switch to a different plan when needed. Other benefits will depend on the policy’s terms, but most have exclusions and limitations regarding intentional self-harm or suicide.

Life insurance policies can be seen as a sort of investment, like certificates of deposit, other accounts in a savings bank, or a credit enhancer. They’re often for the sole purpose of covering the insured’s family in case of their unexpected death, which typically won’t be covered by other financial instruments. They’re a better option than most investments when the owner still has dependents. All benefits go into effect on the date of issuance of the policy. An employee of an employer may even be eligible for similar benefits, if the company covers the life of the employee.

Once a policy owner no longer needs to support dependents, they may start looking for possible alternatives to the policy. Letting the policy run out is always on option, but there’s no value in it. You could always accept the policy’s cash surrender value when giving it up, but this is rarely the best option either since it’s just a small fraction of the death benefit (the policy’s face value). For the best value, it’s worth looking into whether you can sell your policy to a qualified institutional buyer or via a viatical settlement broker. Buyers will take on the payment of premiums in exchange for the ownership of the viaticated policy.

What is a Viatical Settlement?

You may not have heard of “viatical settlements” until this very moment, because while not uncommon, people don’t discuss them often.

The definition of viatical settlement contract is simply a document detailing the acquisition of a life insurance policy from a life insurance policyholder, the viator, to a third party, such as a viatical settlement provider.

The definition of viatical settlement provider is a company dedicated to the purchase of life insurance in exchange for ownership of the policy. Licensed brokers of viatical settlements who work with various viatical settlement providers can facilitate such transactions and negotiate each subsection of viatical settlement contracts. Viators can also work directly with viatical settlement providers without the service of a settlement broker.

Brokers of viatical settlements shop around for and negotiate viatical settlement offers with viatical settlement providers on behalf of a viator. A broker service provider is a licensee and certificate holder backed by appropriate government agencies or similar entity and beheld to a fiduciary duty to act in each applicant’s beneficial interest. A viatical settlement broker’s compensation, such as for arrangement fees or other significant services, may be a flat rate or a percentage of the settlement, in accordance with state laws.

LUMP SUM CASH PAYOUT

The business of viatical settlements enables insured policyholders to sell their insurance policies to viatical settlement providers for an income tax free lump sum cash payout. This payout is less than the policy’s face value, the policy’s death benefit, but more than the cash surrender value.

The cash surrender value is the sum paid by an insurance company to a policy owner if they voluntarily end their policy prematurely or before an insured event happens. The lump-sum is also generally greater than an accelerated death benefit (ADB) that an applicant might seek due to their health status or financial status.

Surrender charges may not always apply, especially not toward policies that are active for years. In some cases, the cash surrender value and the cash value may be the same. In other cases, the surrender charges decrease the cash value.

A policy’s face value, the expected death benefit of the insurance policy, refers to the amount a life insurance company is responsible for paying the insured party’s beneficiaries upon their death, if their plan is still current and issuance of the policy took place appropriately.

Usually, policy owners leave the expected death benefit to their beneficiaries. In the case of a viatical settlement, the purchaser of the policy becomes the new life insurance policyholder, pays future premiums, and collects the bequest death benefit when the viator passes, as the sole beneficiary.

Cancer Patient and Friend
Couple Meets with Counselor

FINANCIAL PEACE OF MIND

Many people may be unsure of what a viatical settlement contract or viatical settlement provider is or how the business of viatical settlements can provide financial peace of mind. The sale of a life insurance policy creates an improved financial situation for viators facing financial hardships during a rescission period, or particularly those dealing with serious, life-threatening illnesses that affect life expectancy.

If you’re struggling as the owner of the policy to pay for long-term medical care or bills and can’t afford to pay insurance premiums, selling your life insurance policy for a deposit of cash could relieve you of your debt or financial obligations to insurance companies. In the long term, this will provide you more time to focus on the things you want to do. Read on for a thorough walk-through of how to receive cash for your insurance policy.

Who Qualifies for a Viatical Settlement?

Per the National Association of Insurance Commissioners (NAIC), any individual with a chronic illness or terminal illness, defined as a condition that affects the activities of daily living, and an existing policy with an insurance company may qualify for a viatical life settlement. A whole, term, universal, group policy, or joint policy is acceptable to sell. Generally speaking, the viaticated policy needs to have been in effect for a minimum of one year and have a valuation of at least $100,000. A viatical settlement purchaser may also have life expectancy requirements for each applicant. Any policyholder interested in making their policy the subject of a viatical settlement contract should explore viatical companies, like American Life Fund, and the options available.
Each life settlement company considers several factors, including the type of disease, the stage the terminal illness is in, the policy’s face value, insurance premiums, and other relevant information. They use these factors to calculate the amount offered to the patient in a viatical settlement contract.

A viatical settlement provider will let you know what kind of figure to expect. The value a settlement provider offers a viator in a settlement investment ranges, but it can be as high as 70% in some cases. Viators receive this lump sum within just a few business days through a viatical settlement provider, without having to wait for an insurance producer or underwriter to provide the expected death benefit of the policy to the beneficiary. Interested viators may wish to speak with financial planners or a public accountant to determine if a settlement is the best choice for them.

Couple Laughs Over Coffee
Hundred Dollar Bills

How Can You Use a Viatical Settlement Cash Payment?

The good news is there aren’t any restrictions on the cash payment received from a settlement. After receiving the viatical settlement proceeds, you can use them as you want.

100% FREEDOM WITH VIATICAL FUNDS

Here are just a few of the ways that viators decide to use their payout:

  • Take a trip with their family
  • Cover their wages so they can quit their jobs or take time off
  • Allow their family members to take time off work and enjoy motion pictures together
  • Pay off medical bills or the costs of the loan for them
  • Pursue additional treatment
  • Pay legal fees
  • Pay for experimental cancer treatments or clinical trials, not covered by insurance
  • Travel to receive medical care
  • Pay for home care or hospice
  • Get extra help around the house with cleaning, childcare, etc.
  • Help cover a state franchise
  • Reimburse family members for their care
  • Repayment of a loan to a credit union or reducing other debts
  • Pay off their home mortgages to a loan association
  • Pay off additional premiums
  • Supplement income
  • Secure the viator’s estate
  • Pay for a family member’s education at U.S.C., or set aside college funds
  • Pay off claims of creditors

Remember, you can use the funds offered in viatical settlement contracts as you please with no restrictions. This is more advantageous than taking on a policy loan from a lender with loan interest, and it requires no collateral.

Viatical Settlement Process

How Quickly Can I Get a Viatical Settlement?

Viatical settlement companies like American Life Fund can finalize a purchase agreement within days, via efficient service of process, which allows you to use your viatical payout any way you want when you want. We can guide you through this quick and easy process.

STEP 1: QUALIFY INSTANTLY

First, find out instantly if you qualify. Then, discuss any questions or concerns you have about viator’s eligibility with one of our human services counselors and financial advisors. Conversations with our professionals can help you determine if you want to complete our easy settlement process. Residents of different states will need to find a viatical settlement purchaser in their own state.

STEP 2: TWO-PAGE APPLICATION

Filing of an application begins when each applicant submits a short, three-page application and a separate document with any relevant personal information in to verify the insured’s identity, medical records, or life insurance policy information they have along with an acknowledgement that all information is accurate. Viatical settlement providers or brokers record the date of the proposal and review/verify this information. Rejections may be based on incomplete applications or misleading information about the insured’s health status, a pattern of unreasonable payments, as well as the applicant’s conduct in general. In cases of acceptances, the written designation of an agent will confirm the settlement.

STEP 3: REVIEW OFFER

Once the due diligence period of collecting and substantiating all the medical information and policy information collected, the viatical settlement broker or company offers you a figure for your policy. If you’re unsatisfied, now is the time for counteroffers. After you accept the offer, you or an affiliate signs and sends back the paperwork and written agreement of the viatical settlement contract to give irrevocable consent of the transaction.

STEP 4: ACCEPT PAYOUT

Once the signed viatical settlement contracts are thoroughly reviewed, a request to change the beneficiary of the policy is submitted. Once this change of beneficiary and bequest of the death benefit has been completed, the release of funds is authorized, and you receive a substantial lump sum for your policy as the viatical settlement purchaser becomes the new policy owner. The final date of the transaction will then be recorded following execution of the contract.

USE FUNDS AT YOUR DISCRETION

Monthly premium payments are no longer your responsibility, and you can use your payout the way you want. It’s that simple. Since they’re tax free, you won’t have to look out for anything like a group certificate from a group administrator showing how much was withheld.

Are Rescissions Possible?

A rescission period begins either 60 calendar days after the signing of a viatical settlement contract or 30 calendar days after the viator receives the proceeds of the viatical settlement. You have the right to begin the rescission process yourself at least 15 days after the assignment of a policy transfers to the buyer. A viatical settlement provider may also act during the rescission period to recover funds if it’s found that the insured falsified information.

These are rare cases, but they may result in subpoenas and court appearances. At this point, legal entities will study the contract, including all its statutes and subsections, as well as the behavior of the applicant and viatical settlement investment agent to reach a resolution and final administrative action.

How are These Settlements Different from Other Cancer Financial Resources?

Who Provides Viatical Settlements

Viatical settlement companies or a viatical settlement broker usually handle viatical settlements and viatical settlement contracts. Just as you can obtain an insurance policy from any eligible insurer, you can seek a settlement from any viatical settlement provider.

Licensed life and viatical settlement providers are responsible for establishing a trust, referred to as a related provider trust, to hold ownership or beneficial interest in purchased policies connected with a financing transaction. A related provider trust must have a written agreement that keeps the settlement provider accountable for complying with regulations and requirements.

A viatical settlement purchaser could also be a stockholder, accredited investor, a buyer on institutional capital markets, or a viatical settlement investment agent who seeks the purchase of a policy to diversify their portfolio for the calendar year, or a qualified institutional buyer/purchaser of securities may seek your policy. If dealing with such a special purpose entity, it’s best to give valuable consideration to whether the purchase is being made in good faith. An experienced broker of viatical settlements or placement agent can help you in these matters and ensure that potential buyers are free of dishonest practices and artifice or are backed by an accreditation agency. It’s a good idea to take down an interested party’s personal information such as business address and telephone number for your financial advisor or life line of authority agent prior to the purchase of a viatical settlement. Some buyers may want to work with a surety bond, which is up to your discretion. The main point is to ensure an accurate description of all offers.

Woman Looking at Data
Couple Dancing

VIATICAL SETTLEMENT BROKERS

Just as a licensed life insurance producer can work for one or several insurance providers to negotiate and sell policies to people in need, brokers of viatical settlements can work for one or many viatical settlement providers to negotiate viatical settlement contracts according to a viator’s instructions or in the best interest of the viator. They will generally oversee everything to do with the acquisition of viatical settlement contracts and handle the account of the viatical settlement.

A viatical settlement broker is a licensee with a valid viatical settlement broker license from appropriate government agencies. A broker license enables a broker of viatical settlements to negotiate on behalf of a viator to secure an offer from a viatical settlement purchaser in accordance with the law of the state. Viatical settlement brokers renew their licenses every year before the expiration of the license, which is validated by an annual statement. This is required for future assignment. They will suffer revocation if they act against the owner of a life insurance policy. Solicitation and the submission of advertising material for the arrangement of life insurance sales to an uninterested party is also prohibited to protect potential viators from undue influence.

In some cases, viatical settlement brokers handle life settlement and viatical settlement contracts. While viaticals are a crucial component of the life settlement industry, viatical settlement brokers differ from other kinds of brokers. Viatical settlement brokers negotiate viatical settlement contracts for policyholders with a life-threatening illness. Life settlement brokers facilitate transactions for individuals with longer life expectancies or who simply want to cash their policy’s face value, who are facing a possible loss of coverage, or simply don’t intend to go through the renewal process.

Viatical settlement brokers typically charge the insured a fee to help negotiate an offer. Brokers of viatical settlements must work with the viator’s interest in mind rather than their own, as the viator’s policy is the subject of a viatical settlement contract. Someone who wishes to sell an individual or group policy through a viatical settlement broker should consult a financial adviser to ensure brokers of viatical settlements are transparent and trustworthy.

Viators can avoid the costs charged by a broker of viatical settlements if they work directly with viatical settlement companies. Regardless of this choice, it’s best to keep all communication in person, rather than on social media or similar communications media.

Is it Legal to Sell My Life Insurance Policy?

Yes! Your insurance plan, whether an individual or group policy, is like any other asset that you own. It is solely your choice to keep or sell it, declare beneficiaries like a spouse or children, or take other actions.

THE CASE THAT SOLIDIFIED YOUR RIGHT TO SELL

The legal basis for the viatical and life settlement industry as a secondary market for life insurance and life settlements as a legitimate, legal transaction for life insurance owners in the United States is the “Grigsby v. Russell” case involving Dr. A.H. Grigsby and his patient John C. Burchard.

In the case of “Grigsby v. Russell,” Dr. Grigsby had an ill patient, Mr. Burchard, who needed a unique and expensive procedure. Hoping to avoid a financial hole, Mr. Buchard volunteered to sell his life insurance policy to the doctor for $100, if he paid the remainder of the insurance policy monthly premiums. Dr. Grigsby agreed, and Mr. Burchard became the first natural person in history to sell a life insurance policy for an economic benefit successfully.

Upon Mr. Buchard’s death, Dr. Grigsby tried to obtain the policy’s face value, the death benefit, but an executor fought the case in court and won. This case eventually ended up in the U.S. Supreme Court. Ultimately, Justice Oliver Wendell Holmes, an Associate Justice of the Supreme Court, described life insurance as property, meaning that its transference to a third party by the viator is legal according to insurance laws.

THE RISE OF VIATICAL SETTLEMENTS

These settlements, viatical settlement brokers, viatical settlement companies, and viatical settlement providers have been around for quite some time. Still, many policyholders are unaware of the viatical industry and the financial benefits of a settlement.
Viatical settlement transactions became popular in the 1980s as more people with life-threatening illnesses had life insurance policies they needed the proceeds from to fund medical expenses. The result was the secondary market we now know as the viatical settlement industry, which enables seniors and those with life-threatening illnesses to sell their insurance to access funds immediately.

Why Should I Get a Viatical Settlement Estimate?

The business of viatical settlements is beneficial for cancer patients, as it offers necessary financial assistance free of interest rates and expensive fees.

ROOM TO FOCUS ON WHAT MATTERS

Financial stress can disrupt healing. A viaticated policy enables people to focus on their recovery and spending extra time with their loved ones.

Hopefully, this guide answers your questions about what a viatical settlement is. Read more about the business of viatical settlements and the settlement process if you want to learn more and determine your qualification for a settlement.

ESTIMATES ARE FREE, NO OBLIGATION

American Life Fund commits to its clients to help them get the necessary funds as quickly as possible. Call us at 877-297-4592 to speak with a dedicated and caring counselor or leave a telephone message.

Use our simple online form and read our online brochure to determine if you’re eligible for a settlement. If you still have any doubts, feel free to consult a legal entity.

Couple Hugging

Viatical Settlements vs. Senior Settlements – How are they Different?

There are two types of life settlements: viatical settlements and senior settlements.

SENIOR SETTLEMENTS

A senior settlement, known as a life settlement, refers to the sale of an insurance policy to a third party by a senior-aged individual in relatively good health and of sound mind and continence or other evidence of financial responsibility. Symptoms like severe cognitive impairment, or anything that requires substantial supervision, may limit one’s ability to receive a settlement without the assistance of an affiliate resident of this state. In exchange, the policyholder receives a cash settlement that could nearly quadruple the policy’s cash surrender value.

Note: People 70 years old and up, or in their Golden Age, usually own senior settlements.

VIATICAL SETTLEMENTS

A viatical settlement is the purchase of a policyholder’s insurance by a third party, such as a viatical settlement provider. Viators receive a payout immediately from selling their policy to a third party at a discount from its cash value.

These settlements, unlike life settlements, are for individuals who have a terminal illness and are seeking additional financial empowerment.

ESTIMATES ARE FREE, NO OBLIGATION

At American Life Fund, we are committed to helping our clients get the funds they need as quickly as possible. If you’d like to speak with one of our caring and dedicated counselors in good standing, please call us at 877-297-4592.

Wondering if you qualify for a viatical settlement? Find out instantly by using our simple online form now.

Why Do People Need Life Insurance, and What Do They Do With It?

Most people purchase a single policy, or individual policy, from an insurance producer to cover the life of the policy owner and their immediate needs. This often includes wage coverage, and some people may become policyholders of disability or dismemberment benefits as well. This covers them in case of a temporary or permanent injury preventing them from working, and they may be eligible for government benefits as well. Policies may include family riders or conversion rights for the owner of a policy to switch to a different plan when needed. Other benefits will depend on the policy’s terms, but most have exclusions and limitations regarding intentional self-harm or suicide.

Life insurance policies can be seen as a sort of investment, like certificates of deposit, other accounts in a savings bank, or a credit enhancer. They’re often for the sole purpose of covering the insured’s family in case of their unexpected death, which typically won’t be covered by other financial instruments. They’re a better option than most investments when the owner still has dependents. All benefits go into effect on the date of issuance of the policy. An employee of an employer may even be eligible for similar benefits, if the company covers the life of the employee.
Once a policy owner no longer needs to support dependents, they may start looking for possible alternatives to the policy. Letting the policy run out is always on option, but there’s no value in it. You could always accept the policy’s cash surrender value when giving it up, but this is rarely the best option either since it’s just a small fraction of the death benefit (the policy’s face value). For the best value, it’s worth looking into whether you can sell your policy to a qualified institutional buyer or via a viatical settlement broker. Buyers will take on the payment of premiums in exchange for the ownership of the viaticated policy.

What is a Viatical Settlement?

You may not have heard of “viatical settlements” until this very moment, because while not uncommon, people don’t discuss them often.

The definition of viatical settlement contract is simply a document detailing the acquisition of a life insurance policy from a life insurance policyholder, the viator, to a third party, such as a viatical settlement provider.

The definition of viatical settlement provider is a company dedicated to the purchase of life insurance in exchange for ownership of the policy. Licensed brokers of viatical settlements who work with various viatical settlement providers can facilitate such transactions and negotiate each subsection of viatical settlement contracts. Viators can also work directly with viatical settlement providers without the service of a settlement broker.

Brokers of viatical settlements shop around for and negotiate viatical settlement offers with viatical settlement providers on behalf of a viator. A broker service provider is a licensee and certificate holder backed by appropriate government agencies or similar entity and beheld to a fiduciary duty to act in each applicant’s beneficial interest. A viatical settlement broker’s compensation, such as for arrangement fees or other significant services, may be a flat rate or a percentage of the settlement, in accordance with state laws.

LUMP SUM CASH PAYOUT

The business of viatical settlements enables insured policyholders to sell their insurance policies to viatical settlement providers for an income tax free lump sum cash payout. This payout is less than the policy’s face value, the policy’s death benefit, but more than the cash surrender value.

The cash surrender value is the sum paid by an insurance company to a policy owner if they voluntarily end their policy prematurely or before an insured event happens. The lump-sum is also generally greater than an accelerated death benefit (ADB) that an applicant might seek due to their health status or financial status.

Surrender charges may not always apply, especially not toward policies that are active for years. In some cases, the cash surrender value and the cash value may be the same. In other cases, the surrender charges decrease the cash value.

A policy’s face value, the expected death benefit of the insurance policy, refers to the amount a life insurance company is responsible for paying the insured party’s beneficiaries upon their death, if their plan is still current and issuance of the policy took place appropriately.

Usually, policy owners leave the expected death benefit to their beneficiaries. In the case of a viatical settlement, the purchaser of the policy becomes the new life insurance policyholder, pays future premiums, and collects the bequest death benefit when the viator passes, as the sole beneficiary.

FINANCIAL PEACE OF MIND


Many people may be unsure of what a viatical settlement contract or viatical settlement provider is or how the business of viatical settlements can provide financial peace of mind. The sale of a life insurance policy creates an improved financial situation for viators facing financial hardships during a rescission period, or particularly those dealing with serious, life-threatening illnesses that affect life expectancy.

If you’re struggling as the owner of the policy to pay for long-term medical care or bills and can’t afford to pay insurance premiums, selling your life insurance policy for a deposit of cash could relieve you of your debt or financial obligations to insurance companies. In the long term, this will provide you more time to focus on the things you want to do. Read on for a thorough walk-through of how to receive cash for your insurance policy.

Who Qualifies for a Viatical Settlement?

Per the National Association of Insurance Commissioners (NAIC), any individual with a chronic illness or terminal illness, defined as a condition that affects the activities of daily living, and an existing policy with an insurance company may qualify for a viatical life settlement. A whole, term, universal, group policy, or joint policy is acceptable to sell. Generally speaking, the viaticated policy needs to have been in effect for a minimum of one year and have a valuation of at least $100,000. A viatical settlement purchaser may also have life expectancy requirements for each applicant. Any policyholder interested in making their policy the subject of a viatical settlement contract should explore viatical companies, like American Life Fund, and the options available.

Each life settlement company considers several factors, including the type of disease, the stage the terminal illness is in, the policy’s face value, insurance premiums, and other relevant information. They use these factors to calculate the amount offered to the patient in a viatical settlement contract.

Mother and Daughter Embrace

A viatical settlement provider will let you know what kind of figure to expect. The value a settlement provider offers a viator in a settlement investment ranges, but it can be as high as 70% in some cases. Viators receive this lump sum within just a few business days through a viatical settlement provider, without having to wait for an insurance producer or underwriter to provide the expected death benefit of the policy to the beneficiary. Interested viators may wish to speak with financial planners or a public accountant to determine if a settlement is the best choice for them.

How Can You Use a Viatical Settlement Cash Payment?

The good news is there aren’t any restrictions on the cash payment received from a settlement. After receiving the viatical settlement proceeds, you can use them as you want.

100% FREEDOM WITH VIATICAL FUNDS

Here are just a few of the ways that viators decide to use their payout:

  • Take a trip with their family
  • Cover their wages so they can quit their jobs or take time off
  • Allow their family members to take time off work and enjoy motion pictures together
  • Pay off medical bills or the costs of the loan for them
  • Pursue additional treatment
  • Pay legal fees
  • Pay for experimental cancer treatments or clinical trials, not covered by insurance
  • Travel to receive medical care
  • Pay for home care or hospice
  • Get extra help around the house with cleaning, childcare, etc.
  • Help cover a state franchise
  • Reimburse family members for their care
  • Repayment of a loan to a credit union or reducing other debts
  • Pay off their home mortgages to a loan association
  • Pay off additional premiums
  • Supplement income
  • Secure the viator’s estate
  • Pay for a family member’s education at U.S.C., or set aside college funds
  • Pay off claims of creditors

Remember, you can use the funds offered in viatical settlement contracts as you please with no restrictions. This is more advantageous than taking on a policy loan from a lender with loan interest, and it requires no collateral.

Graduate with Piggy Bank

How Quickly Can I Get a Viatical Settlement?

Viatical settlement companies like American Life Fund can finalize a purchase agreement within days, via efficient service of process, which allows you to use your viatical payout any way you want when you want. We can guide you through this quick and easy process.

STEP 1: FREE ESTIMATE

First, find out instantly if you qualify. Then, discuss any questions or concerns you have about viator’s eligibility with one of our human services counselors and financial advisors. Conversations with our professionals can help you determine if you want to complete our easy settlement process. Residents of different states will need to find a viatical settlement purchaser in their own state.

STEP 2: TWO-PAGE APPLICATION

Filing of an application begins when each applicant submits a short, three-page application and a separate document with any relevant personal information in to verify the insured’s identity, medical records, or life insurance policy information they have along with an acknowledgement that all information is accurate. Viatical settlement providers or brokers record the date of the proposal and review/verify this information. Rejections may be based on incomplete applications or misleading information about the insured’s health status, a pattern of unreasonable payments, as well as the applicant’s conduct in general. In cases of acceptances, the written designation of an agent will confirm the settlement.

STEP 3: REVIEW OFFER

Once the due diligence period of collecting and substantiating all the medical information and policy information collected, the viatical settlement broker or company offers you a figure for your policy. If you’re unsatisfied, now is the time for counteroffers. After you accept the offer, you or an affiliate signs and sends back the paperwork and written agreement of the viatical settlement contract to give irrevocable consent of the transaction.

STEP 4: ACCEPT PAYOUT

Once the signed viatical settlement contracts are thoroughly reviewed, a request to change the beneficiary of the policy is submitted. Once this change of beneficiary and bequest of the death benefit has been completed, the release of funds is authorized, and you receive a substantial lump sum for your policy as the viatical settlement purchaser becomes the new policy owner. The final date of the transaction will then be recorded following execution of the contract.

USE FUNDS AT YOUR DISCRETION

Monthly premium payments are no longer your responsibility, and you can use your payout the way you want. It’s that simple. Since they’re tax free, you won’t have to look out for anything like a group certificate from a group administrator showing how much was withheld.

Are Rescissions Possible?

A rescission period begins either 60 calendar days after the signing of a viatical settlement contract or 30 calendar days after the viator receives the proceeds of the viatical settlement. You have the right to begin the rescission process yourself at least 15 days after the assignment of a policy transfers to the buyer. A viatical settlement provider may also act during the rescission period to recover funds if it’s found that the insured falsified information.

These are rare cases, but they may result in subpoenas and court appearances. At this point, legal entities will study the contract, including all its statutes and subsections, as well as the behavior of the applicant and viatical settlement investment agent to reach a resolution and final administrative action.

Compass Pointing

How are These Settlements Different from Other Cancer Financial Resources?

LARGE CASH PAYMENT

These kinds of settlements can provide a large sum of money to viators or their trustees/other service recipient since the amount comes from an already extensive life insurance policy.

Someone with a $100,000 policy, for example, could receive a payment of up to $70,000 from that policy. Settlement amounts vary and depend on what stage a medical condition is in, the viator’s level of disability, and the policy amount.

IMMEDIATELY AVAILABLE

A crucial aspect of the life settlement industry, viatical settlements can often help with many significant expenses. Viatical settlement contracts allow policyholders to receive immediate financial help, rather than waiting for a policy’s death benefit later or relying on an ADB.

A viatical settlement transaction relieves you of premium payments each month, in exchange for the ownership of a policy, as the viatical settlement company becomes the policy owner, reducing your monthly bills.

Viatical settlement contracts give people immediate access to a full lump sum without limitations. Viators can put the proceeds of the viatical settlement into their escrow accounts with the help of an escrow agent, place money in surety bonds, or work with any financing entity of their choosing.

COMPLETELY TAX FREE

State laws may subject your life insurance proceeds to income or estate taxes if you wait until death to receive the payout from your insurance provider.

Your policy’s cash surrender value isn’t tax-free and will depend on the issuer of the policy, but these sorts of settlements, unlike some other payouts, are completely free of federal income tax. It’s still wise to talk to a tax advisor to see if you’ll owe any state taxes.

NO ADDITIONAL DEBT

A viatical payment may be a great solution if you’re considering a loan through a financial institution or another lender.
Loans can provide a large number of funds, however, they accrue interest that people must pay back, in addition to other expenses.
A premium finance loan, for example, only increases monthly expenses as the borrower works to pay the insurable interest back to the insurance-providing business entity or small limited liability company.

It is important to remember that accepting the means of a viatical settlement contract may alter the viator’s financial status, which can affect their eligibility for programs like Medicaid.

Who Provides Viatical Settlements

Viatical settlement companies or a viatical settlement broker usually handle viatical settlements and viatical settlement contracts. Just as you can obtain an insurance policy from any eligible insurer, you can seek a settlement from any viatical settlement provider.

Licensed life and viatical settlement providers are responsible for establishing a trust, referred to as a related provider trust, to hold ownership or beneficial interest in purchased policies connected with a financing transaction. A related provider trust must have a written agreement that keeps the settlement provider accountable for complying with regulations and requirements.

A viatical settlement purchaser could also be a stockholder, accredited investor, a buyer on institutional capital markets, or a viatical settlement investment agent who seeks the purchase of a policy to diversify their portfolio for the calendar year, or a qualified institutional buyer/purchaser of securities may seek your policy. If dealing with such a special purpose entity, it’s best to give valuable consideration to whether the purchase is being made in good faith. An experienced broker of viatical settlements or placement agent can help you in these matters and ensure that potential buyers are free of dishonest practices and artifice or are backed by an accreditation agency. It’s a good idea to take down an interested party’s personal information such as business address and telephone number for your financial advisor or life line of authority agent prior to the purchase of a viatical settlement. Some buyers may want to work with a surety bond, which is up to your discretion. The main point is to ensure an accurate description of all offers.

VIATICAL SETTLEMENT BROKERS

Just as a licensed life insurance producer can work for one or several insurance providers to negotiate and sell policies to people in need, brokers of viatical settlements can work for one or many viatical settlement providers to negotiate viatical settlement contracts according to a viator’s instructions or in the best interest of the viator. They will generally oversee everything to do with the acquisition of viatical settlement contracts and handle the account of the viatical settlement.

A viatical settlement broker is a licensee with a valid viatical settlement broker license from appropriate government agencies. A broker license enables a broker of viatical settlements to negotiate on behalf of a viator to secure an offer from a viatical settlement purchaser in accordance with the law of the state. Viatical settlement brokers renew their licenses every year before the expiration of the license, which is validated by an annual statement. This is required for future assignment. They will suffer revocation if they act against the owner of a life insurance policy. Solicitation and the submission of advertising material for the arrangement of life insurance sales to an uninterested party is also prohibited to protect potential viators from undue influence.

In some cases, viatical settlement brokers handle life settlement and viatical settlement contracts. While viaticals are a crucial component of the life settlement industry, viatical settlement brokers differ from other kinds of brokers. Viatical settlement brokers negotiate viatical settlement contracts for policyholders with a life-threatening illness. Life settlement brokers facilitate transactions for individuals with longer life expectancies or who simply want to cash their policy’s face value, who are facing a possible loss of coverage, or simply don’t intend to go through the renewal process.

Viatical settlement brokers typically charge the insured a fee to help negotiate an offer. Brokers of viatical settlements must work with the viator’s interest in mind rather than their own, as the viator’s policy is the subject of a viatical settlement contract. Someone who wishes to sell an individual or group policy through a viatical settlement broker should consult a financial adviser to ensure brokers of viatical settlements are transparent and trustworthy.

Viators can avoid the costs charged by a broker of viatical settlements if they work directly with viatical settlement companies. Regardless of this choice, it’s best to keep all communication in person, rather than on social media or similar communications media.

Receiving a Check

Is it Legal to Sell My Life Insurance Policy?

Yes! Your insurance plan, whether an individual or group policy, is like any other asset that you own. It is solely your choice to keep or sell it, declare beneficiaries like a spouse or children, or take other actions.

THE CASE THAT SOLIDIFIED YOUR RIGHT TO SELL

The legal basis for the viatical and life settlement industry as a secondary market for life insurance and life settlements as a legitimate, legal transaction for life insurance owners in the United States is the “Grigsby v. Russell” case involving Dr. A.H. Grigsby and his patient John C. Burchard.

In the case of “Grigsby v. Russell,” Dr. Grigsby had an ill patient, Mr. Burchard, who needed a unique and expensive procedure. Hoping to avoid a financial hole, Mr. Buchard volunteered to sell his life insurance policy to the doctor for $100, if he paid the remainder of the insurance policy monthly premiums. Dr. Grigsby agreed, and Mr. Burchard became the first natural person in history to sell a life insurance policy for an economic benefit successfully.

Upon Mr. Buchard’s death, Dr. Grigsby tried to obtain the policy’s face value, the death benefit, but an executor fought the case in court and won. This case eventually ended up in the U.S. Supreme Court. Ultimately, Justice Oliver Wendell Holmes, an Associate Justice of the Supreme Court, described life insurance as property, meaning that its transference to a third party by the viator is legal according to insurance laws.

THE RISE OF VIATICAL SETTLEMENTS

These settlements, viatical settlement brokers, viatical settlement companies, and viatical settlement providers have been around for quite some time. Still, many policyholders are unaware of the viatical industry and the financial benefits of a settlement.
Viatical settlement transactions became popular in the 1980s as more people with life-threatening illnesses had life insurance policies they needed the proceeds from to fund medical expenses. The result was the secondary market we now know as the viatical settlement industry, which enables seniors and those with life-threatening illnesses to sell their insurance to access funds immediately.

Stethoscope and Money

Why Should I Get a Viatical Settlement Estimate?

The business of viatical settlements is beneficial for cancer patients, as it offers necessary financial assistance free of interest rates and expensive fees.

ROOM TO FOCUS ON WHAT MATTERS

Financial stress can disrupt healing. A viaticated policy enables people to focus on their recovery and spending extra time with their loved ones.

Hopefully, this guide answers your questions about what a viatical settlement is. Read more about the business of viatical settlements and the settlement process if you want to learn more and determine your qualification for a settlement.

ESTIMATES ARE FREE, NO OBLIGATION

American Life Fund commits to its clients to help them get the necessary funds as quickly as possible. Call us at 877-297-4592 to speak with a dedicated and caring counselor or leave a telephone message.

Use our simple online form and read our online brochure to determine if you’re eligible for a settlement. If you still have any doubts, feel free to consult a legal entity.

Couple Hugging

Viatical Settlements vs. Senior Settlements – How are they Different?

There are two different types of life settlements—senior settlements and viatical settlements.

SENIOR SETTLEMENTS

A senior settlement, known as a life settlement, refers to the sale of an insurance policy to a third party by a senior-aged individual in relatively good health and of sound mind and continence or other evidence of financial responsibility. Symptoms like severe cognitive impairment, or anything that requires substantial supervision, may limit one’s ability to receive a settlement without the assistance of an affiliate resident of this state. In exchange, the policyholder receives a cash settlement that could nearly quadruple the policy’s cash surrender value.

Note: Senior settlements are usually owned by people who are in their Golden Age or 70 and older.

VIATICAL SETTLEMENTS

A viatical settlement is the purchase of a policyholder’s insurance by a third party, such as a viatical settlement provider. Viators receive a payout immediately from selling their policy to a third party at a discount from its cash value.

These settlements, unlike life settlements, are for individuals who have a terminal illness and are seeking additional financial empowerment.

ESTIMATES ARE FREE, NO OBLIGATION

At American Life Fund, we are committed to helping our clients get the funds they need as quickly as possible. If you’d like to speak with one of our caring and dedicated counselors in good standing, please call us at 877-297-4592.

Wondering if you qualify for a viatical settlement? Find out instantly by using our simple online form now.

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