3 Reasons to Consider a Viatical Settlement

3 Reasons to Consider a Viatical Settlement
April 8, 2021

Viatical settlement brokers sell life insurance policies to viatical settlement providers. A viatical settlement purchaser is a third party located by your viatical settlement broker. The broker prepares a written agreement and finalizes the viatical settlement contract. The broker must also confirm the viator qualifies for a viatical settlement. These settlements are only available to people who have a chronic illness or terminal illness. Brokers vet every applicant to ensure they qualify to be a viator. While individuals who do not have a terminal or chronic illness can opt to pursue a life settlement, viatical settlement providers pay more for viatical settlement contracts because the viator has a life expectancy of two years or less. Since the settlement provider is responsible for paying any remaining premium payments on the policy, the viator’s limited life expectancy means the viatical settlement provider won’t incur any unexpected costs.

The viatical settlement purchaser pays the viator a lump sum of cash in exchange for the viator’s policy. Once the viator receives the funds, the viatical settlement provider chooses a new beneficiary for the life insurance policy. When the viator dies, the new beneficiary receives the death benefits from the insurance policy. If you aren’t sure if you need your insurance policy or qualify for a viatical settlement, you may want to meet with a viatical settlement broker who has their license and discuss your options. There are several reasons qualified viators may turn to a viatical settlement company to finalize a viatical settlement.

1. A viatical settlement is a great option if you don’t need your life insurance policy.


People with chronic or terminal illnesses finalize viatical settlements through a viatical settlement company that arranges to sell their life insurance policy. A life insurance policy can be a sound investment, but you may not need your insurance policy if you do not have dependents who will need the death benefits from your insurance policy. You might not need your life insurance policy if you’ve paid off your mortgage, paid for your funeral, and have savings. People who no longer need their insurance policy can opt to surrender the policy to their insurance company. Although you’ll receive the cash surrender value, the amount you’ll receive from a viatical settlement will be higher than the policy’s cash value.

2. Viatical funds can enable you to pay off debts and cover personal expenses.


You don’t have to pay income tax on viatical funds in the United States, which means you can use all the funds you receive however you choose. A financial planner can help you develop a plan to handle your expenses and debts, and you won’t have to hire a tax accountant to help you determine how your viatical funds will affect your income tax payments.

You can head to your financial institution and purchase bonds to generate extra revenue. You can also use your funds to pay each lender you owe money. Since the viatical settlement provider is responsible for paying your insurance policy premiums, you’ll also free up funds you can use for other purposes. You can also use your funds to pay for a family vacation or finance the cost of completing your bucket list.

3. You can use viatical funds to pay for medical care.


A chronic illness or terminal illness can make it challenging to manage the activities of daily living. You may need a home health aide or personal care aide to take you to medical appointments, cook meals, clean your house, and help you bathe and dress. You can use your viatical funds to cover personal care costs to ensure you can remain in your home for as long as possible.

You may be affected by several medical issues, including seizures. While people with epilepsy suffer from epileptic seizures, epilepsy isn’t the only cause of seizures. Different types of seizures can be caused by medications, low sodium levels, high fevers, brain tumors, autoimmune disorders, insomnia, and head trauma. Some people experience absence seizures and remain awake, while other types of seizures may cause loss of consciousness and convulsions. Common seizure types include tonic seizures, tonic-clonic seizures, absence seizures, myoclonic seizures, atonic seizures, focal seizures, and partial seizures. A home health aide can monitor your seizure activity, and their observations can be used to help determine which seizure type you’re experiencing. You may also need a magnetic resonance imaging (MRI) scan to determine the seizures’ cause. You can use your viatical funds to pay for personal care, medical tests, and treatment.

People with terminal or chronic illnesses can use funds from the sale of their life insurance policy to cover personal expenses and medical treatment. You may also opt to secure a viatical settlement if you no longer need your life insurance policy.

Written By
Finance Editor

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