In spite of its once-perceived disapproval by life insurance carriers, the number of people who opt to sell their existing life insurance policy through a transaction called a life settlement, also referred to as a viatical in some circumstances, continues to expand in popularity and necessity. This number has increased even more-so since the vast majority of states have implemented consumer protection laws, with some states going as far as mandating life insurance carriers to inform policy owners of their right to sell their policy in lieu of policy surrender. Life Insurance Policy expert — Eugene Houchins, says: “People tend to overlook the fact that an individual’s life insurance is one of their most valuable assets in certain times of difficulty.” For people who have a life-threatening illness, one can only agree that having all their options on the table, even if they choose to forego a viatical option, can only benefit their decision making process.
Historically, viatical settlements first developed into its own industry in the 1990’s when the AIDS epidemic first began. At that time, people who owned life insurance policies were selling them as a way to effectively raise money for their expensive treatments not typically covered by health insurance. Now that this epidemic is considered less of an immediately terminal condition, the viatical settlement industry continues to serve as a much needed source of money for persons with other life-threatening illnesses, mostly cancer and ALS.
The option to sell your existing life insurance policy for immediate money to pay for care or whatever the financial need may be, is a way to make good use of a viatical settlement. People who can truly benefit from this type of transaction should be encouraged to research the possibility. The only thing that is required to complete a viatical is an existing life insurance policy and a matching buyer. Once a price is agreed upon, the policy owner receives their money, tax free in most cases I might add, and the buyer takes over the ownership of the policy whereby continuing premium payments until the policy matures.
While many believe viatical settlements to be a niche industry due to its small transaction volume, Eugene Houchins points out that most states have given attention by implementing regulations to protect the consumers, in this case, the policy seller. Special requirements in these states may include any or all of the following:
● Minimum payouts in certain states depending on life expectancy
● Disclosures of broker fees and other associated transaction costs
● Licensing for brokers and providers
● Mandatory escrow accounts
● Rescission periods allowing the seller to back-out of the transaction
A viatical settlement can be a valuable tool for individuals who need immediate funds to support themselves financially.
Whether it is to pay for treatment, replace lost income or to pay for everyday living expenses, trading life insurance in exchange for immediate tax-free money can open the door to better financial peace-of-mind for the insured, thus allowing more time focused on one’s health and spending time with loved ones. To learn more about Viatical Settlements, contact Eugene Houchins here.