Viatical Settlements
FAQ
What is a viatical settlement?
A viatical settlement is the sale of a life insurance policy or
certificate (hereafter referred to as policy) issued on the life of a
person, who has a catastrophic or life threatening illness or condition
that is likely to result in death within 84 months, for a dollar amount
that is less than the policy's face value. The person with the
catastrophic or life-threatening illness or condition who is insured under
the policy is called a viator. This person may or may not be the owner of
the policy. Only the owner of the policy has the right to sell the policy.
If you do not own the policy, the owner cannot sell the policy without
your consent. The entity that buys the policy is called a viatical
settlement provider (hereafter referred to as provider), additionally,
there are persons called brokers or provider representatives, who help
with the sale of the policy. A viatical settlement offers you the
opportunity to receive a portion of your policy’s death benefit while you
are still alive, giving you a chance to ease the financial stress that
sometimes goes with an illness or condition.
How do viatical settlements work?
Most providers, provider representatives, or brokers will ask you
to complete an application and medical release forms so that they can
gather information from your life insurance company and your doctors. All
information gathered must be kept confidential and cannot be given to
anyone without your written approval. If you qualify, the provider will
make you an offer for your policy. The amount offered for your policy will
be based on facts such as how long you are expected to live, the amount
you pay for premiums, the rating of your insurance company, and your
policy’s provisions (e.g., a waiver of premium). If you accept the offer,
you will be asked to sign a viatical settlement contract.
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