Viatical settlements involve the sale of a life insurance policy of a terminally ill policyholder to another party. The life expectancy of these individuals is usually less than two years at the time of sale.
The owner of the policy receives a cash settlement for less than the face value of the policy. The policy is transferred to the policy buyer who pays the premiums on the policy and receives the death benefit amount of the policy when the insured dies.
What Can I Receive when I Sell my Life Insurance Policy?
The cash settlement is based on a number of different factors, which can include:
- Estimated life expectancy of the insured
- Current interest rates
- The type of insurance coverage
- Amount of life insurance coverage
- The insured¿s medical condition(s)
- Premium payment amounts
What Are the Risks Involved in Selling a Viatical Settlement?
It is common for people with terminally ill diseases to make hasty decisions to get money for their policies. Some common problems that policyholders may face when selling their policy include:
- Companies which employ high pressure sales tactics
- Companies that offer to pay less competitive rates
- Companies that sell off private information to other organizations
- Some states may charge an income tax
- Family members may be affected by this decision
What Are the Risks Involved in Purchasing a Viatical Settlement?
Currently, there are no rules regarding who is qualified to sell viatical settlements and what must be disclosed at the time of sale. Some common areas that purchasers of viatical settlements should be wary of include:
- Deceptive advertising
- Life insurance policies with false or misleading information
- Whether this investment is prudent, considering your financial situation, time and investment objectives
Do I Need to Consult an Attorney about Viatical Settlements?
The demands imposed by a terminal illness can be taxing. Making an informed decision regarding viatical settlements is difficult given its complex and possibly confusing nature. Seeking an experienced business attorney who can advise you on selling a viatical settlement is a wise decision. Additionally, attorneys can counsel and seek remedies for those who purchased or sold life insurance policies under fraud or misrepresentation.