How to Access Life Insurance Cash with Viatical Settlements
Viatical Settlements basically allow a senior to convert their life insurance policy into cash. Typically, they’re only available if the insured person is terminally ill and are strictly a financial transaction. To learn how viatical settlements work and determine if they’re right for you, keep reading.
How a Viatical Settlement Works
The viatical settlement company or investor essentially purchases the life insurance policy from the insured. They pay a percentage of the policy’s death benefit face value. In turn, they become the beneficiary of the life insurance policy, meaning they will receive the full death benefit.
Why Someone Would Choose a Viatical Settlement
Viatical settlements are typically used by seniors who need access to immediate cash, whether it’s for advance funeral arrangements, a pressing financial need or medical care.
It’s important to remember though that the family members or friends who are listed as beneficiaries on the policy will no longer receive the insurance payments. Because most people rely on senior life insurance benefits to cover funeral costs, this burden of expense then passes on to your family.
Requirements for a Viatical Settlement
Most viatical settlements require that you:
- Are terminally ill.
- Agree to let the viatical company access your medical records.
- Have owned your life insurance policy for at least two years.
- Have informed your beneficiary of the viatical settlement and they agree.
Alternative Options to a Viatical Settlement
Before you opt for a viatical settlement, you may want to consider alternative options. For example, many life insurance policies offer what’s called an accelerated benefits clause. This allows the beneficiary or the insured to access some of the life insurance cash before the person’s death.
Choosing a Viatical Settlement Company
Before you decide on a viatical settlement company or investor, be sure to shop around because not all viatical settlements are created equal. The offers will differ from firm to firm.
Next, call your state’s attorney general’s office and check out the company before you agree to anything. Finally, ask that the funds be placed in escrow before you sign any papers and always consult an estate planning attorney before you do so.
Viatical settlements can often provide much-needed financial relief to terminally ill patients. However, some people prey on that weakness which is why it’s so important to make sure that you’re dealing with an honorable and trusted company before you sign anything over.