Understanding Viatical Settlements

When it comes to dying, none of us is going to get around it. We just have to face the fact that immortality just doesn't come in a bottle (and no, you can't become a vampire, no matter what you might think). As a result of this realization, we have become a society that seeks to either avoid discussions of death or to find ways to profit from it. With viatical settlement investments, you can begin to see just how profitable death can be for some. But is this a good thing? Are we better people for trying to make the process of death profitable?

The Key to Understanding Viatical Settlements

What is a viatical settlement? This is an arrangement between an investor and a life insurance policyholder in which the policyholder sells their policy to the investor for a portion of the value. In this way, the policyholder gets money from the value of the policy and the investor then gets the death benefits when the patient dies. These arrangements are most often seen in cases where the patient has been given a short time to life. When the patient doesn't have any dependents or beneficiaries, they might choose to take the money in order to keep their financial life afloat for a while as they can not work or provide for themselves in other ways.

Sometimes, the process is that the patient works with a viatical settlement broker who then sells the policies to investors. This allows the process to be profitable not just for the investor, but also for the middleman.

The main risk for the investor in this situation is that in order to collect the most death benefits, they hope that the patient will die sooner rather than later. It's the truth. The longer the patient lives, the less money will be paid out. On the other hand, it's no good for the patient if their prognosis changes. If they end up living longer, they might need more money than they estimated, but now have nothing to sell for funds. In addition, if the patient suddenly does have a dependent to add to the policy, they can not add them.

Scams and Understanding Viatical Settlements

The problem is that when you sell a life insurance policy, you want to make sure you are getting a fair value for the policy. Many scam artists are more than willing to take advantage of a sick person, promising them a lot of money, getting the patient to sign over the policy, but then never give the money to the patient. It happens more often than you might think. To prevent this scam, the patient needs to have some help with this process, preferably with a lawyer or with a company that specializes in viatical settlements.

What patients also need to know is that there are other options for obtaining money they need for this part of their lives. Many insurance companies offer accelerated benefits to those with special circumstances. In these cases, you can get a portion of the value of a policy - without having to sell your policy to someone else.

Patients might also be able to obtain loans based on the value of their insurance policies, so that might also be an option for some chronically ill people.

It's sad that some people want to take advantage of others during a difficult time. But thankfully, there are other ways terminally ill people can soothe their money woes. And while viatical settlements work for some, other options exist to make dying less of a traumatic event.