Viatical Settlements
The investing community has always been out on a hunt to discover a kind of settlement that would benefit the terminally ill people and after AIDS hit the scene during the 1980s, viatical settlements was seen as a good option. This policy helped the policy holder to get back his or her money while they were still alive.
What are Viatical Settlements?
The sale of a life insurance policy by the policy owner prior to the maturity of the policy is known as Viatical Settlements. You need not worry about the amount being deducted off the settlement value for its pre-maturity reasons since the discounted value though less than the face value of the policy, will always be in excess of the premiums paid so far or the current cash surrender value.
The main objective of people using such viatical settlements is to get immediate cash for their requirements. The most common cases where such settlements maybe preferred are for the severally ill patients who find it hard to keep paying the high health insurance premiums. For them, this is in fact a good way to get some handy cash as well for their treatment needs.
How are they different from life settlements?
The reason why such policies are used is the major difference between a life settlement and a viatical settlement. While a viatical settlement involves those cases where the insured person is suffering from some terminal, chronic, life-threatening or catastrophic diseases and life settlements refers to the sale of life insurance policies of people over the age of 65 years whose health is of no issue while making such settlements. Usually the viatical settlement providers will buy your insurance only if your life expectancy is twenty-four months or below.
Other terms related to Viatical Settlements:
‘Life expectancy’ refers to an estimate of the number of months or years a given individual is expected to live based upon the evaluation of their gender, age, family lifestyle and medical history. ‘Viatical’ refers to a Latin term “via tecum” which means making provisions for a journey. A ‘Viatical investment’ refers to an investment instrument created through the sale of a life insurance policy in exchange for a cash payment less than its death benefit.
This accelerated death benefit option may be seen as a morbid affair by some. However, the fact that such benefit comes into the hands of the insured during his or her lifetime is what makes this policy one of the most valuable personal finance tools for the ailing community. The benefit of ready cash from such settlements cannot be denied and such upfront cash has helped such ailing people to meet their needs on time.