Viatical Settlements are a financial option for individuals with a terminal or chronic illness and a life expectancy of two years or less. This type of settlement allows policyholders to sell their life insurance policy to a third-party investor in exchange for a lump-sum cash payment, which can be used to cover medical expenses, living costs, or other financial needs.

Key Features of Viatical Settlements

  • Eligibility: Typically available to individuals diagnosed with a terminal or chronic illness, with a life expectancy of 24 months or less. The policyholder must own a life insurance policy with a significant death benefit.
  • How It Works: In a viatical settlement, the policyholder sells their life insurance policy to an investor in exchange for a one-time lump-sum payment. The buyer assumes responsibility for paying future premiums and will receive the full death benefit upon the policyholder’s passing.
  • Benefits:
    • Provides immediate cash to policyholders who need funds for medical treatments, hospice care, or other expenses.
    • The lump-sum payment is often higher than the policy’s cash surrender value, offering more financial relief.
    • Allows policyholders to access the value of their life insurance policy when it is no longer needed or affordable due to health issues.

Viatical settlements can be a life-changing financial solution, providing the necessary funds to manage the impact of a serious illness while improving quality of life during a difficult time.

A viatical settlement is when someone with terminal or chronic illness with less than 2 years left of life expectancy sells their policy to a third-party for a one-time cash payment. The buyer takes over the premium payments and becomes the beneficiary for when the policyholder passes.

There is no age requirement for a viatical settlement.

Yes, to be eligible one must have a policy with a minimum $100,000 face value.

Where life settlements can take 6-12 weeks, the viatical settlement process can be expedited to be completed in as little as a few weeks due to the urgency of the matter.

The face value of a $1 million policy is $1 million. 

There are a few cases when the death benefit does not equal the face value, however, usually the death benefit and face value are the same.

Yes, some states like Florida do not differentiate between life and viatical settlements and simply refer to all life insurance settlements as viatical settlements regardless of health.

No, viatical settlements are tax-free because they are considered an advance on one’s death benefit.

On average, where life settlements payout between 20-25%, viatical settlements can payout between 30-80% of the policy’s face value.

The payout is often based on factors such as the individual’s life expectancy, the face value of the policy, and the cost of future premiums.

Cash from a viatical settlement is often used to cover medical expenses, improve the individual’s quality of life, or address financial needs during their remaining time.

Viatical settlement proceeds may affect eligibility for certain government assistance programs. Individuals should consult with a financial advisor or benefits specialist for guidance.