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American Life Fund > Blog > Uncategorized > What is a Viatical Settlement?

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 being common occurrences, aren’t widely discussed. So what is a viatical settlement exactly? And how does it work?

Many people have no idea what a viatical settlement is or how it can benefit cancer patients. A viatical settlement takes place when a person with a serious illness, such as cancer, sells their life insurance policy for funds. It’s a viable financial solution for cancer patients who often need a large amount of financial assistance for items such as medical treatments or living expenses.

 

Who Provides Viatical Settlements?

Viatical settlements are usually done through a viatical settlement broker or a viatical settlement company. A broker is someone who negotiates a viatical settlement on behalf of the insured. A viatical company is an organization that’s licensed to purchase the life insurance policy directly. Another key difference is that a broker normally charges the insured a fee to help negotiate an offer while a viatical settlement company does not.

 

Who Qualifies for a Viatical Settlement?

If you have a terminal illness such as cancer, ALS, etc., and an existing life insurance policy, you may qualify for a viatical settlement. All policy types are accepted including whole, term, group, and universal. Keep in mind that viatical settlement companies have different qualifications. Each 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, policy premiums, and the patient’s age, gender, and other relevant information. They use these factors to calculate the offer amount presented to the patient.

 

How do Viatical Settlements Differ from Other Cancer Financial Resources?

The main difference between viatical settlements and other cancer financial resources is the level of financial assistance available. Viatical settlements are able to provide a large sum of money since the amount is usually a large portion of an already large life insurance policy amount. For example, if someone were to sell their $100,000 policy, they could receive as much as $70,000 from that policy. Other resources, such as those provided by nonprofit cancer organizations, usually help with small items such as gas cards, wigs, groceries, discounts on prescriptions, and other items.

Another option cancer patients may choose to pursue is a loan through a financial institution. While this option can provide a large amount of funds, they tend to be extremely high-interest. In many cases, the individual isn’t able to pay back the loan amount and becomes further in debt than they were before they took out the loan.

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

We hope this 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. If you’d like to speak with one of our caring and dedicated counselors, please call us at 877-297-4592, or reach out to us online.