With all of the insurance policies out there, it can feel like the companies are trying to confuse you. Some cover some things, while others cover other things, and still other insurance policies seem to cover nothing. And a viatical settlement is just another source of confusion for those shopping around. To help you learn more about this insurance policy process, you might want to keep reading - don't worry, this is a simple and pain free explanation.

Answer Your Question: What is a Viatical Settlement?

When you purchase a life insurance policy, you do so to help protect your family in the event of your death. This is a selfless action that many people take. But what happens if you get a serious disease and you need money to pay off your medical expenses? You can't work. You can't beg for money on the streets (well, you can, but you shouldn't in your condition). So what can you do to keep your finances from going into ruin? With a viatical settlement, you can sell off a life insurance policy you have to an investor for a portion of the overall value. This will give you money now and it will give the investor the payout of the policy upon your death.

It's a little morbid, sure, but if you need money now, why not give away that life insurance policy to someone else? Your insurance policy is typically based on the idea that you will live a long time before you cash it in, but if you have a condition that doesn't seem to have a good prognosis, you may as well have a part of the payout now - to pay off bills, to help family members, and to do all of the things you want before you die.

These viatical settlement investments also provide the investor with the opportunity to make a fair amount of money from the policy in a short period of time. When the holder of the policy dies, they get the money - without having to lift a finger. And the actual payout to the insurance policy holder is going to be less than the overall value, so the investor is getting a great deal - even if it does rely on someone else dying. It's a legal way to profit from someone else's death, to be sure. Of course, it's no wonder why these settlements are disparaged by the insurance community.