What is a Viatical Settlement?
If you’re looking for information on viatical settlements, you or a loved one has probably been diagnosed with a life-threatening illness. This is an incredibly challenging time for you, and we here at American Life Fund, one of the nation’s top leading companies of viatical settlements, are here to help answer any questions you may have, and make the viatical settlement process as easy as possible.
In this article, we’ll cover topics such as:
- What is a viatical settlement?
- How does a viatical settlement work?
- How much can you expect to get from a viatical settlement?
- Do you qualify for a viatical settlement?
- How fast can you get paid for your life insurance policy?
And much more.
Let’s start off with the basics.
What is a Viatical Settlement?
Viatical settlements allow someone diagnosed with a life-threatening illness to sell their life insurance policy for cash. This person is known as the “viator.”
The third party they sell their policy to is an institutional investor, usually a viatical settlement company such as us here at American Life Fund.
So to put it simply, a viatical settlement is a legally binding agreement between a life insurance policyholder (viator) with a very serious illness and a viatical settlement company.
How Does a Viatical Settlement Work?
Once someone has decided to sell their life insurance policy, they usually reach out directly to a viatical settlement company or viatical settlement broker.
When selling a policy in a viatical settlement, the policyholder sells it for more than the surrender value but less than market value.
When you receive the funds, they’re yours. There are no strings attached, no limits on usage. If you want to buy a house, a car, a piece of art, or pay off debts for you or your family, that’s your choice.
How Much Money Will I Get from a Viatical Settlement?
Typically, the rate you’ll receive is 50 to 70% of the policy’s value.
For example, let’s say the viator, John, has a life insurance policy for $500,000. A third party, like American Life Fund, purchases the policy for $350,000.
John now has less than the ultimate payout of the policy but has access to the money now while he’s alive and can use it however he wants.
The viatical settlement company continues to pay any dues for John’s life insurance policy while he is still alive.
Then, once John dies, the viatical settlement company will collect the insurance payout.
Viatical Settlements vs. Senior Life Settlements – How Are They Different?
On the surface, it seems like viatical settlements and senior life settlements are the same things, but they differ in a few crucial ways.
Senior Life Settlements
To sell a life insurance policy under a senior life settlement, the policyholder must be of sound mind and body, over the age threshold required (usually 75).
Before selling a life insurance policy under a viatical settlement, the seller must have been diagnosed with a life-threatening or chronic illness. The effects are the same in that the person selling the policy gets a percentage of cash from their policy’s face value.