Viatical Settlements Explained.
What Is A Viatical Settlement?
LIFE SETTLEMENT
A viatical settlement is the sale of a life insurance policy, in exchange for immediate cash payout. A viatical settlement is very similar to a life settlement, except In order to qualify the insured must be terminally ill, or have a life expectancy of under two years. A life settlement is the sale of a senior’s life policy that is not terminally ill. In exchange for the cash payout, the buyer will take over the premium payment and receive the death benefit when the insured passes.
A viatical settlement allows a policy owner to get fair market value for their policy, higher than the cash surrender value and below the death benefit.
A viatical settlement is another option to get immediate cash from your life insurance asset, at fair market value. Your life insurance is an asset, much like a home. By selling the policy to a third party, the policy owner will receive a higher payout than surrendering the policy to the insurance company. The downside is the potential beneficiaries will not receive the benefit after the seller passes.
A viatical settlement can pay up to 80% of the policy’s face value, although the offer can range widely from policy to policy.
AM I ELIGIBLE?
A Viatical Settlement Can Fund Your Medical Expenses.
Viatical settlements are for people with a terminal illness such as cancer. With the high expense of medical treatments, selling your life insurance may be a good option for you to help fund your treatment. Before lapsing or surrendering our policy, see if you qualify for a viatical settlement.
POLICYMARKET searches the market of buyers to get you the highest value for your policy.
When Do Viatical Settlements Work?
Ask yourself or your client if any of these situations are true:
1. The insured no longer needs the policy or premiums are no longer affordable.
Have all your children grown up and become financially independent? Are insurance premiums too costly to keep the policy? Rather than surrendering the policy consider another option - viatical settlement.
2. The insured wants to fund their life
Enjoy the extra funds while you are living. A viatical settlement can increase available cash for retirement.
3. The insured has high medical bills.
The insured is likely experiencing medical challenges that are very expensive. Their life insurance premiums may be too costly to carry. Many people consider a viatical settlement as an option to cover medical expenses.
Laws & Regulations of Viatical Settlements
In 1911, In Grigsby v Russell the U.S. Supreme Court declared that your life insurance is your personal property. You have the right to assign its ownership at your discretion. This unlocked another option for policyholders - the ability to sell the policy for cash. Insurance and Viatical settlements are heavily regulated on a state by state basis, so each state is different but the concept is the same - to protect the policy owner.
How Viatical Settlements Work
The viatical settlement is essentially the same as the life settlement process (link to life settlement process). A viatical settlement usually takes 3-8 weeks with PolicyMarket, although other companies can take up to 3-4 month. PolicyMarket will search the marketplace of licensed providers to match the seller’s policy with the highest buyer. This is much different than going direct, where the buyer’s objective is to give you the lowest offer. Use our value calculator (link to get estimate) to get an estimate on your policies value.
Reach out to your agent - they can help speed up the process by gathering necessary documents from the insurance carrier.
Often times it is best to contact your agent in order to obtain the necessary documents from the insurance carrier needed to evaluate the policies value.
If the insured qualifies, they will be asked to fill out an application. The application will ask questions about the policy and the insured’s health. All the information you share is confidential. The insured health’s information is many times the most critical part when buyers consider the value of the policy, however no medical is necessary.
Once the diligence is done by the buyers, hopefully there will be an offer for the policy. If you agree on the offer price, the process will move into closing, and the transfer of ownership will begin. Once this happens funds will be placed into escrow and released one the insurance company verifies the change in ownership.
It is free to get an offer and PolicyMarket works for you to get the highest value for your policy. You can learn more about the process here.
Sell Your Life Insurance.
TM
Fund Your Life.
Frequently Asked Questions
What is the average viatical settlement offer?
Each situation is different. Offers can range from 30% to 80% of the face value of the policy. The offer depends on the face value, insured’s health and the cost of the premiums.
What is PolicyMarket?
PolicyMarket works on behalf of the seller to search the marketplace of life insurance buyers creating competition to find the highest settlement value.
What affects my offer?
The main factors are age, health, cost of premium and policy face value.