Who Is Responsible for Future Viatical Settlement Payments?
Many articles talk about the viatical settlement process, but not many discuss what happens after the viatical company purchases your policy. For instance, do you have to stay updated on your former policy? Do you have to make monthly payments? What happens to your policy? Who becomes responsible for paying the premium payments?
A lot of our clients have questions like that, and you probably do too. The short answer is that you don’t have to pay your policy premiums once you get a viatical settlement. All of the money finds its way back to your wallet. Here’s a closer look at the details so you can see what happens after your settlement is finalized.
Who Pays the Premium Payments After a Viatical Settlement?
When you take out a viatical settlement, you sell your policy to the viatical settlement company. As the new owner of your policy, the viatical company has to pay your premiums. Once you sell the settlement, you don’t have to pay your monthly premiums anymore.
Why Does the Viatical Company Take Over Premium Payments?
To receive your viatical settlement you will sell them your life insurance policy. A representative will look at the details of your policy and also reviews your medical records. They do this to verify the information you’ve initially provided to obtain your viatical settlement quote. Based on that information, they provide an offer amount for your settlement.
If you are happy with the offer, you sign the final paperwork, and at that point, the viatical company becomes the new owner of your insurance policy. As the new owner of the insurance policy, they will become responsible for making all future premium payments.
When Should You Stop Making Payments?
Do not stop making monthly payments on your life insurance policy until the viatical settlement deal has been finalized. If you stop making payments before that point, your policy may become inactive or go into default.
If your life insurance company cancels your policy due to nonpayment, you can’t sell the policy to get a settlement. Once the company becomes the official owner and beneficiary of the policy, they will communicate this to you. At that point, you no longer have to make premium payments on the policy.
What Happens If the Viatical Company Stops Making Premium Payments?
Once the viatical company pays you a settlement, you never have to worry about your policy again. In most cases, however, this is unlikely to ever happen. The only situations where a viatical company might stop making premium payments would be in cases where the company is becoming insolvent or going bankrupt, but again, as you already have your viatical settlement, this does not affect you. Once you receive the payment, you can enjoy your funds worry-free with no strings attached.
Who Receives A Life Insurance Payment?
Usually, life insurance is set up so that you pay monthly premiums and at the end of your life, the life insurance policy pays out. At that point, the beneficiaries named on the policy or you’re next of kin receive the funds. However, when you opt for the viatical settlement, the company pays the premiums, and eventually, the company receives the payout from life insurance.
With this arrangement, you forgo the final payout on your life insurance policy, but in exchange, you get a lump sum settlement that you can use at any time on anything you want from medical bills to vacations to experimental treatment and more. You will also no longer be responsible for premium payments. You will have more financial freedom.
What Should You Do If You Can’t Afford to Pay the Premiums on Your Life Insurance Policy?
Many people turn to a viatical settlement because they need the extra funds for treatment, debt, or to cover other costs of living. Even if you don’t need extra money, you may want to check out a settlement to get relief from paying your life insurance premiums. When you are struggling with health issues, staying on top of bills can be challenging.
As explained above, if you just quit paying, you forfeit your policy in most cases. But if you want relief from the monthly payments, you can sell the policy, let the viatical company take over the payments, and enjoy the extra cash in your pocket. This fact is so important that many states are making laws requiring insurance companies to let their clients know about alternative options. Basically, if the company doesn’t tell you about your options and you quit paying, you forfeit all the years you put into paying for your policy.
The insurance company gets to keep those premiums and you get nothing in return. With a viatical settlement, you get the best of both worlds — no more premium obligations and a settlement now.
What Are Your Obligations After Receiving Your Life Settlement?
As indicated above, the viatical company takes overpayment of your premiums when you take out a viatical settlement, and you no longer you have to worry about those monthly payments. That saves you money and reduces some of your financial burdens. On top of no longer being responsible for costly, premium payments, you now have money from your settlement. You can use the funds from your viatical settlement however you like. Whether you choose to pay off medical debts, set up college funds for children or grandchildren, or take a vacation with family, the funds are yours to do as you please.
Once you sell the policy, you have no further obligations to the insurance provider or to the viatical settlement company. You can simply focus on your health and your family, and you can use your settlement to ease financial burdens, explore new treatment options, or free up extra time to spend with your family.
At American Life Fund, we help people get the funds they need now. To learn more about working with a viatical company, contact us directly by calling 877-226-9836 today. Or use our online form instantly see if you qualify.