The Ultimate Guide to Viatical Settlements

Viatical settlements are frequently confused with life settlements, and while there are certainly many similarities, there are some crucial differences as far as how each settlement type works and who is eligible for them. A life settlement is when a person sells their life insurance policy to a third party in exchange for a lump sum cash payout. After the sale, the buyer becomes the new beneficiary of the insurance policy and will receive the death benefit when the insured is deceased. Life settlements make sense when the insured no longer needs their policy, if they can’t keep up with their premiums, or if they need financial assistance with emergencies.

A viatical settlement is less common than a life settlement and is made specifically for those with terminal illnesses. Viatical settlements can be a good choice for cancer patients who need financial help. There are several ways cancer can be identified including MRI, CT scans, and ultrasound. One who receives a cancer diagnosis after visiting radiologists in Annadale, NJ might consider selling their life insurance policy to cover medical treatments and other costs.

History of Viatical Settlements

Life insurance policies have been recognized as personal property that may be sold to a third party since the 1911 Supreme Court ruling in Grigsby v. Russell. Viatical settlements wouldn’t become well-known until the AIDS epidemic of the 1980s. This was a particularly stressful time where young people in the United States were facing the possibility of dying in a few short years because of a terrifying new disease, and viatical settlements gained a negative reputation for essentially being bets placed against someone’s life. The reality, however, is that these settlements helped many people afford treatments that greatly extended their lives.

Viatical Settlement Eligibility

In order to sell your policy to a viatical settlement company, like American Life Fund, you’ll need to meet a few basic criteria. All policy types are accepted, and anyone with a chronic illness may be eligible. Settlement companies will take things like the value of the policy, your monthly premiums, and your type of policy into consideration when calculating payouts.

Typically, viatical settlements require that you have a chronic illness and a life expectancy of no more than four years in order to qualify. The seller’s life insurance policy also needs to be valued at a minimum of $100,000, and it needs to have been in place for at least two years.

Advantages of Viatical Settlements

Arguably the greatest benefit of a viatical over a life settlement is that the payout is tax-free. They also tend to offer bigger payouts vs. other forms of financial assistance. Viatical settlements are also fast with the possibility of receiving your payout in just a few days. American Life Fund requires just a two-page application form along with your policy information and medical records before they can make you an offer. The fast turnaround makes viaticals great for late-stage cancer patients to afford treatments or even end-of-life care if curative measures are no longer the goal.

Another great thing about viaticals is that there are absolutely no restrictions on how you use the money. If you want to spend your settlement on medical care, that’s perfectly fine, but you could also spend it on other things that could improve your daily life. This could include things like in-home help, or you could choose to pursue some dreams you’ve had with the time you have left. Travel to other countries, pursue a higher education program or buy a nice car. Leave the money to your family or a charity you believe in if you want. It’s your money, and you can do anything that improves your quality of life.

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