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Viatical Settlements Explained

American Life Fund > Viatical Settlements Explained

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.

LUMP SUM CASH PAYOUT

A viatical settlement refers to the financial transaction of a life insurance policy from a life insurance policyholder, the viator, to a third party, such as a viatical settlement provider.

Licensed brokers of viatical settlements who work with various viatical settlement providers can facilitate such transactions and negotiate 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.

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

The cash surrender value is the money sum paid by an insurance company to a policy owner if they voluntarily end their policy prematurely or before an insured event happens.

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.

Usually, policy owners leave the death benefit to their beneficiaries. The business of viatical settlements through a viatical settlement broker or settlement provider gives this sum to the viatical settlement provider.

In the case of a viatical settlement investment, the purchaser of a policy, the viatical settlement provider, becomes the new life insurance policyholder, pays future premiums, and collects the death benefit when the viator passes, as the sole beneficiary.

FINANCIAL PEACE OF MIND

Many people may be unsure of what a viatical settlement 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 people facing financial hardships, particularly those dealing with serious, life-threatening illnesses.

If you’re struggling to pay for long-term medical care or bills and can’t afford to pay insurance premiums through a premium finance loan, selling your life insurance policy 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 life insurance policy.

Who Qualifies for a Viatical Settlement?

Per the National Association of Insurance Commissioners, any individual with a chronic illness, defined as a condition that affects daily living, and an existing policy with an insurance company may qualify for a viatical life settlement. A whole, term, universal, or group policy is acceptable to sell. 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 disease 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 viatical settlement investment ranges, but can be as high as 70% in some cases. Viators receive this lump sum immediately through a viatical settlement provider, without having to wait for an insurance producer to provide them with the expected death benefit of the policy. This accelerated death benefit can be beneficial to those with life-threatening illnesses.

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 funds, you can use them as you want.

100% FREEDOM WITH VIATICAL FUNDS

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

Here are some ways people choose 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
  • Pay off medical bills
  • Pursue additional treatment
  • Pay for experimental cancer treatments, 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
  • Reimburse family members for their care
  • Reduce other debts
  • Pay off their home mortgages
  • Pay for college tuition, or set aside college funds

Remember, you can use the funds offered in viatical settlement contracts as you please with no restrictions.

How Quickly Can I Get a Viatical Settlement?

Viatical settlement companies like American Life Fund can finalize a settlement within days, allowing 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 with one of our counselors and financial advisors. Conversations with our professionals can help you determine if you want to complete our easy 3-step settlement process.

STEP 2: TWO-PAGE APPLICATION

You submit a short, two-page application and any medical records or relevant life insurance policy information you have. Viatical companies or brokers review and verify this information.

STEP 3: REVIEW OFFER

Once confirmed, the viatical settlement broker or company offers you a figure for your policy. After you accept the offer, you sign and send the final paperwork and written agreement of the viatical settlement contract.

STEP 4: ACCEPT PAYOUT

Within days, you receive a substantial lump sum for your policy as the viatical settlement provider company becomes the new policy owner.

USE FUNDS AT YOUR DISCRETION

Premium payments are no longer your responsibility, and you can use your payout the way you want. It’s that simple.

How are Viatical Settlements Different from Other Cancer Financial Resources?

Who Provides Viatical Settlements

Viatical settlement companies or a viatical settlement broker working on behalf of one or several viatical settlement providers usually handle viatical settlements and viatical settlement contracts.

VIATICAL SETTLEMENT COMPANIES

A viatical company is a licensed organization that can purchase a life insurance policy directly from the insured and receive the face value of the plan.

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.

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.

A viatical settlement broker is an individual with a valid viatical settlement broker license. A broker license enables a broker of viatical settlements to negotiate on behalf of a viator to secure an offer.

In some cases, viatical settlement brokers handle life and viatical settlement contracts. While viatical settlements 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.

Viatical settlement brokers typically charge the insured an application 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 advisor 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.

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, 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 premiums. Dr. Grigsby agreed, and Mr. Burchard became the first person in history to sell a life insurance policy for a cash payout 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

Viatical settlements, viatical settlement brokers, and viatical settlement providers have been around for quite some time. Still, many policyholders are unaware of the viatical settlement industry and the financial benefits of a viatical 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 care. 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. More settled finances enable 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 viatical 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. Policyowners can work directly with American Life Fund, without the services of a broker of viatical settlements with their insurance company. Call us at 877-297-4592 to speak with a dedicated and caring counselor.

Use our simple online form to determine if you’re eligible for a viatical settlement.

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. 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.

Viatical settlements, unlike life settlements, are for individuals who have a life-threatening illness and are seeking additional financial empowerment.

What is a Viatical Settlement?

It’s quite possible that you’ve never heard of the term “viatical settlement” until this very moment. That’s because viatical settlements, while not uncommon, aren’t widely discussed.

LUMP SUM CASH PAYOUT

A viatical settlement takes place when the insured of a life insurance policy (also known as the viator) sells their life insurance policy to a third party (the viatical settlement provider) for a lump sum cash payout—this payout is less than the death benefit, but more than the cash surrender value.

The buyer then becomes the new life insurance policyholder, pays future premiums, and collects the death benefit with the viator passes, as the sole beneficiary.

FINANCIAL PEACE OF MIND


Many people have no idea what a viatical settlement is or how a viatical settlement can provide financial peace of mind. The sale of a life insurance policy is a viable solution for individuals who are facing financial hardships, particularly those who are dealing with serious, terminal illnesses.

If you’re struggling to pay your medical bills or need to pay for long-term medical care, selling your life insurance policy could relieve you of your debt or financial obligations relating to additional premiums. Read on for an in-depth walk-through of how to sell your life insurance policy for cash.

Who Qualifies for a Viatical Settlement?

According to the National Association of Insurance Commissioners, any individual who has a chronic illness (defined as a condition that affects the activities of daily living) and an existing life insurance policy may qualify for a viatical life settlement. All policy types are accepted including whole, term, group, and universal.

Each life settlement company takes various factors into account including the type of disease, the stage the disease is in, the type of policy you have, the policy’s face value, insurance premiums, and other relevant information. They use these factors to calculate the offer amount presented to the patient.

How Can You Use a Viatical Settlement Cash Payment?

Here’s the good news — there are absolutely no restrictions on the cash payment you receive from your settlement. Once you have the funds, you can use them exactly as you like.

100% FREEDOM WITH VIATICAL FUNDS

Here are just a few of the ways that people 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
  • Pay off medical bills
  • Pursue additional treatment
  • Pay for experimental cancer treatments, 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
  • Reimburse family members for their care
  • Reduce other debts
  • Pay off their home mortgages
  • Pay for college tuition, or set aside college funds

Remember, Viatical settlement funds can be used however you want, without restriction.

How Quickly Can I Get a Viatical Settlement?

You can get a viatical settlement within days, and then you can use your viatical payout however you choose. The process is quick and easy, and we can guide you through it.

STEP 1: FREE ESTIMATE

First, get a free estimate. Then talk with one of our counselors about your questions or concerns, and decide if you want to complete our easy 3-step settlement process.

STEP 2: TWO-PAGE APPLICATION

You submit a short, two-page application along with any medical records or life insurance policy information you have on hand. Then, the viatical company or broker reviews and verifies this information.

STEP 3: REVIEW OFFER

Once confirmed, the viatical broker or company presents you with an offer for your policy. If you accept the offer, you sign and send back the final paperwork.

STEP 4: ACCEPT PAYOUT

Within days, the company becomes the new policy owner and you receive a large lump sum for your policy.

USE FUNDS AT YOUR DISCRETION

You are no longer responsible for the insurance premium payments and can use your payout however you choose. It’s that simple.

How are Viatical Settlements Different from Other Cancer Financial Resources?

The main difference between viatical settlements and other cancer financial resources is the level of financial assistance available.

LARGE UNDIRECTED CASH PAYMENT

Viatical settlements are able to provide a large sum of money since the amount comes from an already large life insurance policy.

In contrast, other resources, such as those provided by nonprofit cancer organizations, usually only help with small items such as gas cards, wigs, groceries, discounts on prescriptions, and other items.

An an example, someone with a $100,000 policy could receive a viatical settlement for as much as $70,000 from that policy (settlement amounts vary based on criteria such as age, stage, and policy amount).

COMPLETELY TAX FREE

Viatical settlements, unlike some other payouts, are completely tax-free.

By contrast the cash surrender value of your life insurance policy is taxable. If you wait until death, the proceeds of your life insurance may be subject to income tax or estate tax, depending on state laws.

IMMEDIATELY AVAILABLE

Aviatical settlement can often help with numerous larger expenses now instead of waiting for a policy’s death benefit to pay for them later.

NO ADDITIONAL DEBT

If you’re considering a loan through a financial institution, a viatical settlement may be a better option for you.

While loans can provide a large amount of funds just like a viatical settlement, they accrue interest which must be paid back on top of other expenses, and only increase monthly expenses as the person works to pay back the loan.

In many cases, an individual may not be able to pay back the loan amount back to the business entity, adding additional debt and stress.

In contrast, with a viatical settlement transaction, you no longer have to pay your monthly life insurance premium payments so, in addition to getting the lump sum, this option also reduces a person’s monthly bills.

Who Provides Viatical Settlements

Viatical settlements are usually done through either a viatical settlement company or a viatical settlement broker.

VIATICAL SETTLEMENT COMPANIES

Aviatical company is an organization that’s licensed to purchase life insurance policies directly from the insured.

VIATICAL SETTLEMENT BROKERS

A viatical settlement broker is an individual who negotiates on behalf of the insured to secure an offer.

Another key difference is that a viatical settlement broker normally charges the insured an applicable fee to help negotiate an offer, while working directly with a viatical settlement company avoids this cost.

Is it Legal to Sell My Life Insurance Policy?

Yes! Your life insurance plolicy is considered an asset that you own, like any other asset that you have. It is at your sole discretion to keep it, sell it, declare beneficiaries, etc.

THE CASE THAT SOLIDIFIED YOUR RIGHT TO SELL

The legal basis for life settlements as a legitimate, legal transaction for life insurance owners can be found in the “Grigsby v. Russell” case.

In the case of “Grigsby v. Russell,” doctor A.H. Grigsby had an ill patient named John C. Burchard who required a special and expensive operation. In hopes of avoiding a financial hole, he volunteered to sell his own life insurance policy to the doctor for $100, if he agreed to pay the remainder of the insurance policy premiums. Dr. Grigsby agreed and that’s how Burchard became the first person in history to successfully sell a life insurance policy for a cash payout.

One year later, Dr. Grigsby tried to acquire the insurance policy’s death benefit when Burchard passed away, but an executor took the case to court and won. This case eventually ended up in the Supreme Court. Ultimately, Justice Oliver Wendell Holmes, an Associate of Justice of the Supreme Court, described life insurance as property, which meant it could be transferred to a third party by the viator, according to the insurance laws.

THE RISE OF VIATICAL SETTLEMENTS

Although viatical settlements have been around for quite some time, many life policyholders are unaware of the financial benefits a viatical settlement can provide to an individual policyholder or loved one.

This type of transaction became popular in the ’80s as more people with terminal illnesses had life insurance policies they didn’t need. This led to what we now know as the viatical industry—when seniors or individuals who are terminally ill can sell their insurance policy for immediate access to their funds.

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, also known as a life settlement, is a transaction through which the owner of a life insurance policy sells his or her policy to a buyer or third party life settlement broker in exchange for a cash settlement that can almost quadruple the amount of the policy owner’s cash surrender value.

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

VIATICAL SETTLEMENTS

The second kind of life settlement is a viatical settlement. A viatical settlement is when a policyholder with a terminal illness sells their life policy to a third party at a discount from its cash value for an immediate payout.

The main difference between a viatical settlement and a life settlement is that a viatical settlement is reserved for those who are terminally ill—individuals who have a two-year life expectancy, and are seeking additional financial empowerment.

Why Should I Get a Viatical Settlement Estimate?

Overall, viatical settlement transactions are a great option for cancer patients because it provides the level of financial assistance needed without any costly fees or interest rates.

ROOM TO FOCUS ON WHAT MATTERS

Financial stress can get in the way of healing and when your finances are more settled, you can truly focus on recovery and spending extra time with your family.

We hope this guide helps answer the “What is a viatical settlement?” question for you. If you would like to learn more about the viatical settlement process and see if you qualify for one, read more about the process.

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, 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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