Viatical Settlement Information

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It can be very tempting to sell your life insurance policy by using a viatical settlement to fund medical expenses and support your family. Viatical settlements are extremely complex and should be thoroughly researched before making a decision on whether it is right for you.

A viatical settlement is a transaction in which the consumer (viator) sells his or her life insurance policy to a viatical settlement company (provider) for a onetime lump sum payment that is a percentage of the policy's face value. The viatical provider then becomes the beneficiary of the policy and is responsible for making any premium payments. When the viator dies, the provider collects the full death benefit of the life insurance policy.

Viatical settlements are valued based on the:

Type of life insurance policy, such as whole life, universal life, and variable life
Face amount, death benefits, cash value, and account value of the life insurance policy
Age and medical condition of the viator
Financial rating of the life insurance company
Amount and frequency of the premiums
Overall economic conditions

Viatical settlement providers require detailed information about your policy and current health condition. Your viatical broker will review the information and ask an independent medical expert to assess your condition and life expectancy. The settlement broker will then send all the information to various viatical providers who will assess all the information and make an offer, which will be a percentage of the face value of the policy. You should receive multiple offers and your broker should give you an idea of the range of lower offers as a point of comparison.

Disadvantages of viatical settlements:

Your lump some payment may only be 10 to 30 percent of the face value of your policy.
Receiving a lump sum cash settlement can make you more vulnerable to creditors who already have outstanding judgments against you.Cashing in your life insurance policy can also affect your eligibility for public assistance programs, such as Medicaid and supplemental SSI.
Cashing in the death benefits under your insurance policy may also impact on insurance benefits for other family members.
You may be liable for significant tax and legal costs lowering your net proceeds on the sale of your life insurance policy.
Additional life insurance may not be available for you to purchase as you may no longer be insurable or have used up all available coverage.

If you have a bad experience with a viatical settlement provider or broker, it is important to consult with an attorney for a review.

If you or a loved one has sold off a life insurance policy by use of a viatical settlement in the last 2 years, please contact our law firm for a free review.