Viatical Settlement Vs. Life Insurance Settlement

The viatical settlement, senior settlement, and life settlement all provide the same service to the insured individual. Both life and viatical settlements are considered same. They have very little difference. Both the settlements have a policy owner and the funding company who takes the ownership of life insurance policy in replace for a sum of money. The difference between the two is based upon the expected life span of the insured. If the insured has a shorter life span, less than 2 years, the service is deemed viatical. If the insured has a life expectancy of 2-15 years the service is deemed to be a life insurance settlement. When the policy holder sells his policy he receives a lump sum in cash. The word viatical comes from the Latin word Viaticum, which means to be given a stipend or a living expense for your journey or travels.

Viatical settlement means that the policy holder sells his policy to third parties because he is terminally ill. Generally these types of policies have a face value of nearly $100,000 and insure a person under the age of 50. Life insurance settlements have a larger face value of over $250,000 and insure a person with a short life expectancy because of health related problems or elderly or both. The policies that qualify for life or viatical settlements include whole life, universal life, term, joint-survivorship, group, key-man, corporate owned policies and policies held in irrevocable life insurance trusts. Viatical settlements are tax-exempt if you meet certain criteria: the regulatory definition of a person with a catastrophic or chronic illness and the settlement comes from a licensed broker. Many funding companies are moving towards a greater interest in life settlements over viatical. This is because of advances in medical technology. The funding companies assume that a specific medical condition won't be solved in short order. This happened in the 80's during the birth of viatical. Many funding companies invested in policies of HIV positive consumers. But afterwards there had been major advances in Aids drugs which affected the lives of many of these insured.

Life insurance settlements are for people who are not in a position to pay their monthly installments or people who need money for current expenses. If your family is facing financial crises then you can help them by selling your insurance policy to a third party. In viatical settlements, elderly people sell their policy to viatical settlement companies because they are facing life threatening disorders. Viatical settlement firms usually buy these policies only after seeing the proof of their terminal illness. Another requirement for viatical settlement is that your doctor must certify that your life expectancy is between two to four years from that date. The only way to get money for your life insurance policy is by cashing it out. These new ways generally help the policy holder to redeem their money in times of need. Over the years, this type of settlement has developed brokerages and firms to help you find the right person and the right price for your life insurance policy.