Tips and Considerations Regarding a Viatical Settlement

People alive with a terminal illness often face tough financial problems. A viatical settlement is an option that can provide you cash to help with expenses. It is the sale of a life insurance policy to a third party. The holder of the policy sells it for a percent of the death benefit. The buyer pays all future premiums and collects the full death benefit when the insured dies.

In a similar way, a life settlement will provide a striking option for a healthy policyholder who no longer wishes to pay the premium on a policy, and wants to get more money than the surrender value of that policy. In a life settlement, the insured is re-underwritten, and any offer made for the policy based on their current life expectancy. This can be more than the surrender value. Before you go into any viatical or life settlement transaction, you should:

• Contact your insurance agent for information about settlements.
• Consult your financial advisor, who knows about your personal financial needs.
• Contact with your state insurance department for information about current laws.

Judge all your options
• Find whether you have any cash value in your insurance policy. You may use some of the cash value to meet your immediate needs and keeping your policy in force for sometime.
• Find out whether life insurance policies have an accelerated death benefits provision. It pays you a substantial portion of your policy's death benefit.

Other considerations
• Contact a professional tax advisor to find out the tax implications. Not all proceedings are tax-free.
• First know that the proceeds are subject to the claims of any creditors.
• Find out whether receipt of a cash settlement would cause you to drop any public assistance benefits like food stamps or Medicaid.
• Know that you should provide certain medical and personal information.

Consumer tips
• Know how the process will work and when the phases will happen.
• Make a decision whether to sell your policy directly to a life or viatical settlement provider or go through a settlement broker who would do the comparison shopping for you.
• If you are using a settlement broker, comparison shops on your own.
• You need not have to accept any life or viatical settlement offer
• Check all application forms for correctness, especially information about your medical history.
• You should be honest in your answers to application questions.
• Also be sure that the giver agrees to put your settlement proceeds in escrow with a financial institution to make sure that your funds are safe during the transfer.
• Find out whether you have the right to change your mind about the settlement after you obtain the proceeds. If you have you should return the money you were paid and also the premiums the buyer paid. Try to understand what information a buyer should know about you to buy your policy, and who else might get that information, before you offer the information.