What Is a Viatical Settlement? Understanding Its Meaning, Benefits, and Process
When facing a serious or terminal illness, financial pressures can add unnecessary stress to an already difficult time. Many policyholders are unaware that their life insurance policy may hold immediate cash value through a viatical settlement.
A viatical settlement allows someone with a qualifying medical condition to sell their life insurance policy to a licensed buyer for a lump-sum cash payment—often much more than the policy’s surrender value. The buyer then assumes responsibility for future premiums and collects the death benefit later.
In this guide, we’ll explain what viatical settlements are, how they differ from traditional life settlements, who qualifies, and the key benefits and considerations to help you make an informed financial decision during a challenging time.
What is a Viatical Settlement Guide
A viatical settlement is the sale of a life insurance policy by a terminally or chronically ill policyholder to a licensed third-party buyer, in exchange for a lump-sum cash payment. After the sale, the buyer becomes the policy’s new owner and beneficiary and continues paying the premiums until the insured’s passing.
The primary feature of a viatical settlement is that the insured must be facing a serious illness—often with a life expectancy of less than two years. Because of this unique situation, viatical settlements are designed to offer immediate financial support when it’s needed most.
Viatical vs. Life Settlement: What’s the Difference?
- Health condition: Viaticals require the insured to be chronically or terminally ill. Life settlements are typically for seniors in declining but stable health.
- Tax treatment: In many cases, viatical settlement proceeds may be tax-free under U.S. law if certain conditions are met.
- Buyer intentions: The buyer still becomes the policy owner and beneficiary, but viatical buyers often specialize in working with more urgent timelines and sensitive cases.
Who Qualifies for a Viatical Settlement?
At Summit Life Settlements, we evaluate each case carefully and privately. You may qualify for a viatical if:
- You are diagnosed with a terminal illness (such as cancer, ALS, or advanced heart failure)
- Your life expectancy is generally under 24 months
- You own a life insurance policy with a death benefit of $100,000 or more
- Your policy is permanent, or if term, it must be convertible to permanent
Each case is unique. Our team provides confidential assessments to determine whether a viatical settlement is the right fit for your situation.
Why Consider a Viatical Settlement?
Facing serious illness can lead to overwhelming expenses—medical care, travel for treatment, in-home support, lost income, and more. In these situations, your life insurance policy may be one of your most valuable yet underutilized assets.
Viaticals can be used to:
- Pay for medical bills and prescriptions
- Afford at-home care or facility-based treatment
- Support your family with ongoing expenses
- Take a trip or fulfill a final wish
- Eliminate debt for peace of mind
Instead of letting the policy lapse or surrendering it for a minimal cash value, a viatical settlement allows you to get substantially more.
How the Viatical Settlement Process Works
Summit Life Settlements follows a structured yet compassionate approach:
- Initial Consultation: We begin with a private, no-obligation conversation. You’ll share basic policy details and information about your diagnosis and health status. All information is kept fully confidential.
- Policy Review: Our team reviews your life insurance policy to determine if it qualifies. This includes checking the policy type, face value, premium costs, and whether it can be converted (if term).
- Medical Evaluation: We request medical records or physician statements that support the life expectancy estimate. This helps determine your policy’s value to potential buyers.
- Marketplace Bidding: We list your policy on our viatical settlement platform, where multiple licensed institutional buyers can review and make competitive offers.
- Review Offers: You receive several offers (not just one), giving you the freedom to choose the one that fits your financial needs. Summit explains every offer clearly, with full transparency.
- Sale & Transfer: Once an offer is accepted, Summit prepares the paperwork and coordinates the legal transfer of ownership. You no longer have to pay premiums.
- Funds Disbursed: Your payment is released quickly—often within just a few business days after finalizing the contract.
Why Summit Life Settlements?
At Summit Life Settlements, we understand that deciding to pursue a viatical settlement is more than a financial choice—it’s a deeply personal one. Our mission is to guide you through this process with care, integrity, and complete transparency.
Compassionate Guidance
Every case is handled with empathy, dignity, and confidentiality. We take the time to understand your situation and ensure you’re supported at every step, not rushed into a decision.
Access to Large Network of Buyers
Rather than settling for one offer, our marketplace approach connects your policy to multiple licensed buyers, creating competition that can significantly increase your payout potential.
No Upfront Costs or Hidden Fees
You pay nothing out of pocket. Our services are 100% performance-based, meaning we’re only compensated if—and when—your policy sells.
Trusted by Families and Professionals Nationwide
We’ve helped countless clients and advisors navigate the viatical settlement process with peace of mind. Our reputation is built on clarity, results, and genuine care for the people we serve.
You don’t have to navigate this decision alone. Summit’s expert advisors are here to help you navigate the life settlement market so you can understand your options and make the best possible choice—financially and personally.
Real Story: Michael’s Viatical Settlement
Michael, age 63, was diagnosed with stage IV pancreatic cancer. His treatment costs had surpassed $75,000, and his $250,000 universal life policy was becoming difficult to maintain.
Summit conducted a private review, gathered his records, and listed his policy. Michael received multiple offers. He accepted the highest offer for $175,000, allowing him to pay off medical bills, support his wife, and enjoy quality time with his family without financial stress.
Final Thoughts
Understanding what a viatical settlement is can open a door to greater freedom, comfort, and dignity in one of life’s most difficult chapters. If you’re facing serious illness, your life insurance policy may hold more value than you realize.
At Summit Life Settlements, we provide more than a service—we provide clarity, support, and financial peace of mind. Whether you’re exploring your options or ready to act, we’re here to walk beside you every step of the way.
👉 Learn more or request your free consultation now
Frequently Asked Questions: Understanding Viatical Settlements
1. What is a viatical settlement?
A viatical settlement is the sale of a life insurance policy by someone with a serious or terminal illness to a licensed third-party buyer in exchange for an immediate lump-sum cash payment. The buyer takes over premium payments and receives the death benefit when the insured passes away.
2. Who qualifies for a viatical settlement?
Viatical settlements are typically available to individuals who:
Have been diagnosed with a life-threatening or terminal illness, such as cancer, ALS, or advanced heart disease
Own a life insurance policy with a face value of at least $100,000
Are seeking immediate funds to cover medical expenses, caregiving costs, or personal needs
Each case is unique, and Summit Life Settlements can help determine if your situation qualifies.
3. How much can I receive for my policy?
The payout amount depends on several factors, including life expectancy, policy size, premium costs, and policy type. In many cases, a viatical settlement pays significantly more than the policy’s cash surrender value, giving policyholders meaningful financial relief.
4. Is a medical exam required?
No. Unlike traditional insurance processes, a viatical settlement does not require a medical exam. Summit obtains and reviews your existing medical records (with your consent) to assess eligibility and help secure the highest possible offer.
5. Is a viatical settlement taxable?
In most cases, viatical settlement proceeds are tax-free for individuals certified as terminally ill (with a life expectancy of 24 months or less), according to IRS guidelines. However, tax situations can vary, so it’s best to consult a qualified tax professional for personalized advice.
6. How is a viatical settlement different from a life settlement?
While both involve selling a life insurance policy, the key difference lies in the policyholder’s health:
Viatical settlements are for individuals with a terminal or life-threatening illness.
Life settlements are for seniors (typically 65+) who may not be terminally ill but no longer need or can afford their policy.
Because of the shorter life expectancy involved, viatical settlements typically result in higher payouts.
7. How long does the viatical settlement process take?
The process usually takes 4 to 8 weeks from application to funding. Summit Life Settlements manages everything—medical review, policy verification, and bidding among buyers—to ensure a smooth, transparent, and efficient experience.
8. What can the funds from a viatical settlement be used for?
The proceeds are yours to use freely—many policyholders use them to:
Cover medical or long-term care expenses
Pay for in-home care or hospice
Reduce debt or supplement income
Enjoy quality time and experiences with loved ones
9. Is selling my policy through a viatical settlement safe and legal?
Yes. Viatical settlements are regulated transactions in most U.S. states to ensure consumer protection and fair market practices. Summit only works with licensed institutional buyers to maintain full compliance and transparency.
10. How does Summit Life Settlements help with viatical settlements?
Summit acts as your trusted brokerage and advocate, representing you—not the buyer. We:
Collect and review your medical and policy records
Present your case to multiple licensed buyers
Negotiate to secure the highest cash offer
Manage the process from start to finish, with no medical exams or upfront fees
Our mission is simple: to help you unlock the full value of your life insurance policy with clarity, compassion, and care.
