Viatical Settlements
Life settlements deal in the sale of life insurance policies by the owner of the policy for an amount less than the face value of the life insurance policy, to investors. The investors are designed to make a profit when the death of the insured takes place by collecting more from the death benefits than they originally paid out for the policy. This equals higher profit margins the sooner the policy holder dies. Viatical settlements are practically the same as life settlements, with the difference being that the insured is terminally or chronically ill as outlined in IRS codes. This has become an 18 to 19 billion dollar industry as of June 2009. Transactions of this type have been in existence to Americans since 1911. During the notoriety of the AIDS epidemic of the decade of the 80’s, the policies of these people were sought out by policy holders, as well, the market situations of late and massive financial losses as a result have raised a demand for the acquisition and for investors to look out these types of policies, because, for many older people, this life insurance policy is one of their most worthy possessions.
In general, life settlement and viatical deals are more often than not options for people of higher financial standing and over 70 years of age. Independent estimates report that of this group of individuals, approximately 20% of these have life policies that would have a price that exceeds the cash value offered by the insurer. A largely growing number of experts believe that informing clients about offering life settlements and viaticals should come into the duty of financial advisers. This being said, individuals in the industry are now placing an emphasis of life settlement and viatical education for financial professionals to facilitate that they can present accurately the life settlement option to all clients who might possibly have positive results from it. In most cases, life policy holders older than 70 are major canidates, but occasionally individuals as low as 55 years old are eligible and or possible. On the most part, the life policies of such people are required to have a base face value of $50 thousand, and to have policies that have been active for at least 2 years. A low cash surrender value, and life insurance premiums of less than 8 percent a year are also to be considered. Where there is a life expectancy less than 2 years, they are called viatical settlements. There are many people that are involved and a party to a transaction of this kind occurring. First you have the policy holder, you have financial advisers, then the policy providers, brokers, life insurance investors, as well as life expectancy providers and many others. Life and viatical settlements are rapidly becoming a more popular type of investment and as a path for elderly people to take care of expenses and rising medical expenses later in life.
