November 11, 2009

With the economy currently in a downturn, money is becoming harder and harder to come by. Being terminally ill can make matters even worse, especially if the individual requires medical attention and care everyday. A recently published article on InsuranceAgent.com discusses a way to make cash with the help of a life insurance policy.

“A viatical settlement allows you to purchase another person’s life insurance policy,” the article, Viatical Settlement: Life Insurance Policy for Sale, describes. “You can obtain the full policy or portion of it at a price that is less than the death benefit. When the seller dies, you benefit from the death benefit.”

While viatical settlements are not unheard of, they are very rare because of the risks they pose. A viatical settlement allows the policyholder to sell their life insurance policy for cash. Investors take this opportunity to invest in someone else’s life insurance policy because when the policyholder dies, the investor gets to collect the death benefit.

The amount of the death benefit, however, depends on the seller’s life span. “Your return depends on the seller’s life expectancy, meaning that if he/she dies sooner, you will receive a higher return,” the article emphasizes. “On the other hand, if the seller lives longer than expected, your return will not be as attractive. It’s a bit morbid, but you will gain more from a viatical settlement if the seller passes away immediately.”

Sellers of viatical settlements are, in most cases, those who are insured, terminally ill or nearing retirement. Investors are usually people who have nothing but time and are looking for a relatively large financial payout in the coming years.

“Keep in mind that a viatical settlement affects not only you, but also the people who care for and about you,” the article states. “Before you make a decision, consult with your family as well as your life insurance agent on the life-altering decision. If you are in desperate need of cash, however, a viatical settlement is a quick and easy solution to a stressful problem.”  

Staff contribution: Rafael Onak

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