A viatical settlement is when a life insurance policyholder sells their policy to a third-party buyer in exchange for a cash settlement. While a viatical settlement shares some similarities with a life settlement, there are some key differences. The biggest of these is that viatical settlements are designed specifically for the terminally ill.
You can pursue a life settlement whether you’re sick or not. Life settlements also require you to have a permanent life insurance policy, but viatical settlements have no such requirement. Perhaps most importantly, viatical settlements pay more than life settlements, and a viatical settlement isn’t taxed.
If you meet the requirements, a viatical settlement can be much more beneficial than the alternative options. These settlements are generally meant for those with a life expectancy of two years or less, and there is no age limit on viatical settlements. Generally speaking, the lower the policyholder’s life expectancy, the higher the lump sum payout.
A life insurance policy also needs to be at least two years old and have a face value of at least $100,000 to qualify for a viatical settlement. You can find more about the viatical settlement process at americanlifefund.com, but here are some of the best reasons to consider a viatical settlement.
Cope With Declining Health
One of the most common reasons to get a viatical settlement is to improve your quality of life as your health declines. Those with terminal or chronic illnesses often need in-home care and other assistance. The money from a viatical settlement can be used to pay nurses or personal assistants, not to mention covering other medical expenses. It isn’t uncommon for the terminally ill or their families to incur thousands in debt due to medical costs, so a viatical settlement may be the financially sensible move.
You Have No Need for Life Insurance
If you either have no beneficiaries, or they’re financially comfortable without your estate being left to them, then it may not make sense for you to keep a life insurance policy. This is especially true if you have outstanding debts in other areas, such as a mortgage, that you’d like to pay off during the time you have left. A viatical settlement can offer more money than other options, and you can ensure your relatives won’t have to deal with any outstanding issues.
You Can No Longer Afford Premiums
Life insurance premiums will increase as you age and become a higher risk client. If your policy is becoming difficult to keep in combination with your other expenses, selling it is likely the best option. It won’t do anyone any good if it’s allowed to lapse, after all. Trying to wait for the death benefit of a life insurance policy just doesn’t make sense in some situations when there is an immediate need for money.
You Want to Help Others
If you can afford to do so, you may decide you’d like to help others during the time you have left. This could include family members if cash now is better for their situation than a death benefit. Alternatively, you could make a donation to charity or causes you believe are worthwhile.
Improve Your Quality of Life
The proceeds from a viatical settlement are your money from your policy, and it’s meant to enhance your life. If your health permits, you may want to use the money to pursue opportunities you haven’t gotten to yet. Maybe you’d like to travel. There are stranger reasons why many people buy luxury cars. Your health is precious, and if the money from a viatical settlement can help you take better advantage of it, there’s arguably no better reason to take one.