If you’re looking at your viatical settlement options, then you already know that your life insurance policy can help you out long before your beneficiaries receive the death benefit you’ve accumulated over the years. Maybe you took out a life insurance policy when you were younger, and you’ve paid the monthly premiums dutifully for many years. Your insurance company has been great to work with, and you’ve felt secure in the knowledge that your beneficiaries will be taken care of when your time comes.
Unfortunately, that time is now sooner than you might have hoped. Unfortunately, sometimes we get the worst news: a terminal illness means that our life expectancy is cut short. If this is the case, and the policyholder wants access to the fund they’ve accumulated over years of paying premiums, there are options. A policyholder may opt to sell their life insurance policy to a third party in either a life settlement or a viatical settlement. With that in mind, what’s the difference between a life settlement and a viatical settlement? Moreover, how can you make sure that you’re getting the best viatical or life settlement around?
What is a viatical settlement?
Simply put, a viatical settlement takes place when a policyholder sells their life insurance policy to a third party. That third party becomes the new owner of the insurance policy and is responsible for all premiums going forward. The third-party will also be the beneficiary of the death benefit upon the initial seller’s passing. A viaticals is only an option for people who have a life expectancy of two years or less, and the idea behind them is to provide a way for ill patients to access additional funds with which to pay off debts, pay for medical treatments, or knock bucket list items off their list. The seller can use the cash value of their insurance policy however they’d like, but they have to have a terminal illness proven with medical records to access the funds.
What is a life settlement?
Life settlements are often confused with viaticals, and that’s because the two are so similar. The main difference is that a life settlement can be carried out regardless of whether the seller is an ill patient or not. Also, the funds from a life settlement may be subject to tax, depending on the state laws where you live. Viaticals is generally tax-free, making them attractive financial options for many seniors and those with terminal illnesses.
How to find the best broker for a viatical or life settlement?
If you or someone you love is considering a life settlement or a viatical settlement, it is in your or their best interest to do plenty of research ahead of time. Speak to a financial advisor, read internet reviews, and make sure that the offer you’re accepting for the sale of a life insurance policy is the best offer on the table. Don’t take everything you hear at face value.
Just like anything else in life, reviews are generally the best way to learn about a specific broker or brokerage you’re considering working with for a life settlement process. Speak to the broker several times to make sure that you feel comfortable with them. Check their reviews in respected places, like the Better Business Bureau. A Better Business Bureau recommendation really means something, whereas a review from a random commenter may not carry the same weight.
Whatever your reason for looking into the options that a life settlement or a viatical settlement might offer you, it’s good to know that there are options out there for those who don’t need a life insurance policy any longer. Take out a calculator, and think about what’s actually in your best interest. It might be time for the sale of the life insurance policy.