Terminally ill patients who require money for their cost of care while living have a few options for their end of life care. A third-party buys your life insurance for less than the mature value andĀ upon your death, receives the benefits. They then become the effective owner and beneficiary of the policy and make a profit by paying less for the settlement than it will pay at death. However, these settlements actually often only pay out a small percentage of the policyās value, but these settlements can still be great for helping with palliative care.
How Viatical Settlements Work
Viatical settlements are only available to terminally ill patients who have a permanent life insurance policy. The percentage paid depends on the overall value of the life insurance and the health condition affecting the policyholder.Companies calculate how long the policyholder is expected to live versus the premium cost per month. These companies want to buy policies where the insured is expected to die before paying these monthly premiums becomes cost-prohibited.The viator is the insured person who is looking to sell their policy. This person signs a form to turn over beneficiary rights to the policy to the company. The insurance company is notified of the sell and the change of beneficiary when the policyholder dies.
How Much Do Viatical Settlements Pay
The price you will receive for selling your life insurance policy depends on several factors. The face value of the policy is the chief defining factor. Large life insurance policies will receive more substantial offers than smaller policies.The life expectancy of the insured person is the second-most defining factor. TheĀ shorter the anticipated longevity, the more likely youāll get a higher offer. The age of the insurer is also taken into account. The older you are, the higher the price you will receive for your policy.Most companies prefer to deal with permanent life insurance policies rather than term life insurance policies. However, term life insurance policies can be bought in a viatical settlement. The price offered will be much lower than a permanent policy though.
You should have a qualified attorney assess any viatical settlement before it is arranged. The process can be quite overwhelming and an attorney can help you determine if the offer made is sufficient and whether there will be any complications from arranging such a settlement.