Viaticals and Senior Settlements.  Structured Settlements.

Viaticals and Structured Settlements: A Way to Raise Cash for the Terminally Ill and for Seniors

Welcome Funds.com viatical settlement A viatical settlement is the sale of an existing life insurance policy by a critically ill person or a person over 65 years old to a third party in exchange for an immediate lump sum percentage of the face value of the policy.

The viatical settlement is an effective estate planning tool which permits a person dealing with a life-threatening illness to ease the financial stress often associated with a long, disabling medical condition. In short, a viatical settlement allows a terminally ill person or senior over the age of 65 to enjoy the benefits of his or her life insurance policy while he or she is still alive and to transform a non-producing asset into immediate cash which can be used to improve the quality of his or her life.

Some Viatical Brokers:

Innovative Settlement Solutions
"...one of the Nation’s very first companies formed to specialize in life insurance settlements.... devoted to representing consumers and obtaining the highest cash settlements for them in a completely honest, ethical and legal manner. We have also been very active in educating and consumers and their advisors about the options available to them with regard to liquidating a life insurance policy...."

Learn Life Settlements
"... Life Settlements are a relatively new tool for owners of Life Insurance policies. Often, owners of Life Insurance policies have outgrown the need for their life insurance. Many of those life insurance policies can be resold to institutional investors. Even term life insurance, which has zero ‘cash value’ can often be resold...."

Legacy Benefits
"... one of the oldest and most experienced life settlement provider companies in the world. We purchase life insurance policies covering people who have limited life expectancies – normally 20 years or less... Below is a general description of a life settlement (a.k.a. life insurance settlement) and how it works:

• A life settlement is the sale of a life insurance policy covering a person who has a limited life expectancy -- generally 20 years or less.
• In a life insurance settlement transaction, the policy owner is paid a lump sum in cash in exchange for transferring ownership of the policy to Legacy Benefits Corporation.
• The amount paid in a life insurance settlement is based primarily on the life expectancy of the person insured, the face amount of the insurance policy and its premium requirements.
• A life settlement is the more lucrative alternative to letting the life insurance policy lapse or surrendering it to the issuing insurance company...."

What is a Viatical and How Does It Work?

If you have been diagnosed with a terminal illness with a life expectancy of less than 3 years, and you have a life insurance policy whose premium payments are current and the policy's been in force for at least three years, you are a likely candidate for a viatical settlement.This settlement can provide you with a lump sum of cash which you can spend any way you please while you're still alive. Furthermore, if your life expectancy is less than 24 months, this lump sum is exempt from federal income tax and capital gains tax. Some folks use this cash to pay for their medical expenses while they're still alive. Some use it to travel or spend their final days debt free and worry free.

What exactly is a viatical settlement?

A viatical settlement is a 3 way agreement for the purchase of a life insurance policy. You, the insured (the "viator) offer your life insurance policy or policies for sale to the highest bidder via a viatical broker who acts as your agent. The broker compiles the information about you and your policy, verifies with the insurance company that you are able to sell the policy, and 'shops it' to several investors (the "providers") who in turn study this information and calculate a cash value they are willing to offer for your policy. Providers make cash offers on policies according to the type of policy, its face value, and the viator's medical prognosis. The shorter the life expectancy, the larger the settlement, as there are fewer insurance premium payments to be made. You can expect cash offers between 20% and 70% of the face value of your policy.Your agent chooses the highest offer and submits it to you for your approval. Once you, your agent, and the highest bidder ("the provider") have reached a mutual agreement, you surrender your policy to the provider, and the provider makes the agreed upon cash settlement payment directly to you. The provider, now the owner of the policy, assumes payment of the insurance premiums and will receive the final benefit death benefit. Your agent receives a fee for his services from the providers.

Companies who Purchase
Life Insurance Policies

J. G. Wentworth "... Most life insurance policies are purchased to protect loved ones and to shield them from the "what ifs" in life. Thankfully, the majority of these policies are never needed. Once the policies have served their useful purpose, the owners either allow them to lapse or surrender the policies to the insurance company for cash surrender value. This is where J.G. Wentworth Life Settlements¹ steps in to help. We offer insurance owners the option to sell their policies in exchange for a lump sum payment, that is greater than the cash surrender value, if any, offered by the insurance company...."

Is a Viatical or Life Settlement Right for You?

Having enough cash for your final days can alleviate a lot of stress. One of the ways to accomplish this is through a viatical or structured life settlement. In order to decide if this is the right course of action, you first need to know what your options are. A viatical settlement is a less complicated, and possibly more lucrative, choice.

Option One: Surrendering your policy.

When you surrender your life insurance policy, you are in effect 'reselling' it to the insurance company from which you purchased it. Insurance companies typically only pay the cash value of your policy plus interest. If you've owned the policy for just a few years, your policy probably hasn't accrued much cash value. Because viatical settlement offers are based on the FACE VALUE of your policy and not its cash value, there's an excellent chance that a viatical settlement would pay you more money, especially since there are no taxes to pay on a viatical settlement. A viatical settlement broker will be able to help you determine which option is financially more favorable.

Option Two: Borrowing against the cash value of your insurance policy

This is a viable option if you have a 'permanent life' policy (whole, universal or variable) which accrues a cash value as you pay premiums. But it's NOT an option with term life insurance which doesn't build a cash value. With a viatical settlement, you can receive cash on ANY life insurance policy, term or permanent.

If you've only owned your permanent life policy for a short period of time, the cash value of your policy is probably very little and a viatical settlement will probably give you more cash than borrowing against a policy. Bear in mind that when you borrow, the unpaid balance of the loan is deducted from the end benefit. Furthermore, your insurance company will deduct the unpaid balance on the loan from the end benefit.

Consider also that you never pay federal income tax or capital gains tax on a viatical settlement, nor do you pay interest. A loan against the value of your policy may or may not be taxable, and you do pay interest on the cash you receive.

How does an Accelerated or Living Benefits Rider on my policy compare with a viatical settlement?

Option Three: Adding a Living Benefits Rider (LBR) to your policy.

Before you consider this option, check with your personal tax advisor to see if this is a viable option for you. Consider that if you purchased your insurance policy prior to 1985, there may be a fee for adding this rider to your policy. Furthermore, if you decide to take just a portion of your end benefit, you will still be responsible for paying your policy premiums.

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