Viatical settlements are similar to life settlements, but they are specifically for people who are terminally ill, usually with a life expectancy of less than two years.
When comparing Viatical Settlements vs. Life Settlements, viatical settlements often offer higher payouts. This is because the shorter life expectancy reduces the investor’s risk and wait time.
In a viatical settlement, the policyholder sells their life insurance policy to an investor in exchange for a lump-sum cash payment. This payment can be as high as 75% to 80% of the policy’s face value. After the sale, the investor becomes the beneficiary and collects the full death benefit once the policyholder passes away.
This option gives terminally ill individuals access to money while they are still alive. The funds can be used for medical care, experimental treatments, daily expenses, or simply to enjoy time with loved ones and improve their quality of life.
Viatical settlement companies provide financial relief for people facing end-of-life costs, while also offering investment opportunities for buyers, who may earn higher returns than traditional investments. The industry is regulated to ensure fairness, safety, and transparency for everyone involved.
While viatical settlements are similar to life settlements, they are specifically designed for individuals facing serious or terminal illnesses. These settlements provide a way to convert your life insurance policy into much-needed cash during a difficult time, offering financial relief when it’s needed most.
One major benefit is the Viatical Settlement Tax advantage:
Viatical settlement proceeds are generally tax-free if used to cover medical or healthcare-related expenses.
Because of the sensitive nature of these situations, it’s crucial to carefully review your options and work with trusted professionals. This helps ensure that your decisions support comfort, dignity, and financial peace of mind as part of your end-of-life planning.
Policyholder
The owner of the life insurance policy who is terminally ill and decides to sell the policy.
Insured
The individual whose life is insured by the policy. In a viatical settlement, the insured is also the policyholder and is terminally ill.
Buyer (Investor)
The third party that purchases the life insurance policy, assumes responsibility for premium payments, and receives the death benefit upon the insured’s death.
Broker
A licensed intermediary who helps the policyholder find a buyer and negotiate the terms of the sale.
Life Expectancy (LE) Reports
Medical evaluations used to estimate the remaining lifespan of the insured, which helps in determining the policy’s value.
REASONS FOR A VIATICAL SETTLEMENT
Immediate Financial Needs
For individuals facing a terminal illness, selling their life insurance policy can provide much-needed funds to cover medical expenses and other costs associated with the illness.
Retirement Planning
For individuals nearing retirement age, a viatical settlement can be used to supplement their income and provide financial stability during this phase of life.
Quality of Life Improvement
With a viatical settlement, individuals can use the funds to improve their quality of life while they are still alive, such as taking trips or spending time with loved ones.
Tax Benefits
In many cases, the proceeds from a life or viatical settlement are tax-free, providing additional financial benefit for policyholders.
No Longer Able to Afford Premiums
As health declines, it may become challenging for individuals to keep up with premium payments. Selling the policy through a viatical settlement can alleviate this financial burden.
Business Continuity
Selling a life insurance policy through a viatical settlement can also ensure that business partners or heirs have the necessary funds to continue operations after the policyholder’s death.
Unnecessary Coverage
In some cases, a life insurance policy may no longer be necessary, such as when the beneficiaries have grown and become financially independent.
Debt Relief
The funds received from a viatical settlement can be used to pay off debts or outstanding medical expenses, providing peace of mind and financial security for the policyholder.
Investment Opportunity
The funds received from a viatical settlement can be invested in other opportunities that offer better returns or align with current financial goals.
Charitable Contributions
Some individuals may choose to donate a portion or all of the proceeds from a viatical settlement to a charity or cause that is meaningful to them, leaving behind a lasting impact even after their passing.
ELIGIBILITY FOR Viatical insurance settlement
- Diagnosed with a terminal illness and have a life expectancy of two years or less.
- Have a life insurance policy with a face value of $100,000 or more.
- Some states require the policy to be in force for a certain period of time – usually two to five years.
- The policyholder must own the insurance policy and not have any active loans against it.
BENEIFTS OF A VIATICAL SETTLEMENT
Immediate Cash:
Provides a substantial lump sum payment that can be used to cover medical expenses, improve quality of life, or meet other financial needs.
Higher Value than Life Settlement or Surrender Value:
Viatical settlement payouts are higher than life settlement payouts because the policyholder has a shorter life expectancy. In many cases, the offer can range from 50% to 75% of the policy’s death benefit.
These offers are also much higher than the policy’s cash surrender value—which is the smaller amount the policyholder would get if they simply canceled the policy and gave it back to the insurance company.
Relief from Premium Payments:
The policyholder is relieved of the responsibility to make future premium payments, which can be significant for large policies.
Financial Flexibility:
Converts an illiquid asset into liquid cash, providing financial flexibility for the policyholder.
Tax Implications
The proceeds from a viatical settlement may be subject to federal and state taxes. It is advisable to consult a tax professional.
Loss of Death Benefit
The beneficiaries will no longer receive the policy’s death benefit upon the insured’s death, which could impact financial planning.
Privacy Concerns
The process requires sharing personal and medical information with third parties.
Regulatory Requirements
Viatical settlements are regulated transactions, and the policyholder must ensure compliance with state laws and regulations.
Impact on Public Assistance
Proceeds from a viatical settlement may affect eligibility for certain public assistance programs, such as Medicaid.
WHY USE A VIATICAL SETTLEMENT BROKER?
Working with a Viatical Settlement Broker offers many advantages for people looking to sell their life insurance policy. These professionals know the industry well and have connections with a wide network of investors, which helps them secure the best possible offer for their clients.
Brokers also provide an important layer of protection, following strict ethical guidelines and regulations that put the policyholder’s best interests first. This gives peace of mind—especially for those who may be hesitant about financial transactions.
Another key benefit is access to funds. Brokers can help individuals who may not qualify for traditional loans due to serious health issues or limited income. This support can be vital for covering medical bills, treatments, or other urgent expenses.
Privacy and confidentiality are a top priority. Brokers understand how personal this process is and are committed to protecting your information every step of the way.
The full life settlement process usually takes 3 to 6 months, but at Summit Life Settlements, our streamlined marketplace can shorten this timeline to as little as 6 to 12 weeks.
Our process includes a detailed consultation to understand your goals, a fair evaluation of your policy, and outreach to our network of trusted buyers. We manage a clear and competitive bidding process, negotiate the best terms, and take care of closing—all to make the experience simple and stress-free for you.
With our advanced Summit Life Marketplace platform, policyholders get expert help and better results. Our team supports you every step of the way, offering clear guidance and tools like our free life settlement evaluator report to help you feel confident throughout the life settlement process.
By using Summit’s tools and experience, you can expect a faster, smoother, and more rewarding experience—giving you the financial support you need, when you need it most.
Expertise and Knowledge
Brokers specialize in this niche, possessing extensive experience and understanding of market trends, regulations, and risks, benefiting buyers and sellers.
Smooth Transactions
Brokers ensure smooth transactions, managing every step from finding buyers to negotiations and administration.
Network of Buyers
Brokers have connections with buyers, providing access to a broad pool of investors, leading to better offers and a quicker process.
No Upfront Costs
Brokers work on a contingency basis, paid only upon transaction completion, motivating them to secure the best deal.
Negotiation Skills
Acting as intermediaries, brokers use their skills to secure favorable deals, understanding market dynamics to benefit both parties.
Regulatory Compliance
Brokers adhere to strict regulations, ensuring ethical and client-focused operations.
Legal and Administrative Handling
Brokers manage paperwork and legal requirements, ensuring transactions are compliant and efficient.
Peace of Mind
Brokers professionally handle complex processes, giving clients peace of mind.
Confidentiality
Brokers maintain strict confidentiality, handling sensitive information discreetly.
Ethical Standards
Reputable brokers follow ethical standards, prioritizing fair treatment and client interests.
VIATICAL SETTLEMENT PROCESS WITH SUMMIT LIFE SETTLEMENTS
Initial Consultation and Evaluation
Consultation: The process begins with an initial consultation where the broker gathers information about the policyholder and the policy.
Evaluation: The broker performs a preliminary evaluation to determine if the policy is a good candidate for a life settlement.
Policy Review and Documentation
Document Collection: The broker collects necessary documents, including the policy, medical records, and any other relevant information.
Review and Analysis: A thorough review and analysis are conducted to assess the policy’s value and potential market interest.
Marketing and Bidding Process
Marketing: The broker markets the policy to a network of potential buyers.
Bidding: Buyers submit bids, and the broker facilitates a competitive bidding process to maximize the sale price.
Offer and Negotiation
Offer Presentation: The broker presents the highest offers to the policyholder.
Negotiation: The broker may negotiate with buyers to improve the offers.
Sale Agreement and Closing
Agreement: Once an offer is accepted, the broker assists in drafting and finalizing the sale agreement.
Closing Process: The closing process includes transferring ownership of the policy and disbursing the funds to the policyholder.
Overall Time Frame (6-12 weeks)
Total Duration: Through the Summit Life Marketplace, a process that normally takes months can be reduced to weeks. Our aim is to complete the transaction within 6 to 12 weeks. This timeline may vary based on the complexity of the policy, the responsiveness of the buyer, and the efficiency of the documentation.
HOW CAN SUMMIT LIFE SETTLEMENTS HELP?
A viatical settlement can be a valuable financial option for people facing a terminal illness or chronic condition. At Summit Life Settlements, we understand how important financial stability is during these difficult times. That’s why we’re committed to offering compassionate support and helping you get the maximum value for your life insurance policy.
We believe everyone deserves to make informed financial choices. Selling a life insurance policy can seem complicated, so we work hard to make the process simple and stress-free for you.
Working with a trusted viatical settlement broker is key to getting the best offer. Our experienced brokers know the market and have strong connections with institutional buyers. This means we can help you access competitive offers and guide you through every step of the process.
We also understand that every situation is unique. That’s why we take time to learn about your needs and offer personalized solutions based on your circumstances. We’re committed to transparency and honesty, so you’ll always have the information needed to make a confident decision.
Our secure Summit Life Marketplace platform connects you directly with qualified buyers, helping you get the highest value for your policy. We handle everything—from paperwork to negotiations—so you can focus on what matters most.
Our marketplace includes valuable tools like our Life Settlement Evaluator Report, which shows the potential value of cashing out a policy and investing the proceeds (along with future premiums) in an index fund, versus keeping the policy for its full death benefit. It’s designed to help you make the most informed and financially sound decision.
Our platform also prioritizes privacy and security by using advanced encryption to keep your personal information safe and ensure a secure, confidential transaction.
Our experts are ready to answer your questions and guide you through the process. Let Summit Life Settlements help you unlock the full value of your life insurance policy and move toward a brighter financial future. Contact Us today to learn how we can help.
Viatical Settlements: Unlocking the True Value of Your Life Insurance
A viatical is usually used to guide a life insurance policy sold by an individual who is suffering from a serious ailment or terminal condition. Policyholders can access a portion of their policy’s value while they are living. This option will be beneficial when unexpected medical bills or such urgent expenses hit you.
A viatical settlement is when a policyholder sells their life insurance to someone else for less than the death benefit but more than the cash surrender value. This deal is good for people who need money right away and don’t want to wait for the policy to mature.
When things are tough, knowing what a viatical settlement is can help people make smart decisions about their money.
It’s crucial to remember that viatical definition are regulated to safeguard everyone concerned when you look into what they are. The approach gives the policyholder greater value by letting them keep their insurance instead of giving it back to the insurer.
Summit Life Settlements helps our clients understand and handle the viatical settlement process with care. Our team’s extensive knowledge will help you obtain the greatest deal from life settlement providers. This way, you can get fair offers for the correct price from a firm that understands how much your policy is worth. Trust us to navigate this complex market, turning life insurance into a practical financial resource when it matters most.
What is a viatical settlement?
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.
How old do you have to be to qualify for a viatical settlement?
There is no age requirement for a viatical settlement.
Is there a minimum life insurance policy face value one must have to qualify for a viatical settlement?
Yes, to be eligible one must have a policy with a minimum $100,000 face value.
How long does the viatical settlement process take?
Where life settlements can take 6-8 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.
What is the face value of a life insurance policy?
The face value of a $1 million policy is $1 million.
Is there a difference between the death benefit and face value?
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.
Do some states refer to all life settlements as viatical settlements?
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.
Are viatical settlements subject to tax?
No, viatical settlements are tax-free because they are considered an advance on one’s death benefit.
How much do viatical settlements payout on average?
On average, where life settlements payout between 20-25%, viatical settlements can payout between 30-80% of the policy’s face value.
Who qualifies for a viatical settlement?
Have been diagnosed with a terminal illness (often with a life expectancy of 24 months or less).
Own a life insurance policy with a death benefit of $100,000 or more.
Are at least 18 years old.
Have a permanent life insurance policy (e.g., universal, whole life, or convertible term).