Limits to Viatical Settlements
If you are terminally ill or chronically ill, you might be able to
sell your life insurance policy to another person (a third party).
You usually have to sell your life insurance policy for a lower amount
of the full face value. The amount that is paid is usually based on
the remaining life expectancy of the insured (you). The death benefit
usually ranges from 50 percent to 80 percent. When you die, the third
party will get the full death benefit.
Before making a final decision to make a viatical settlement to pay
for your long-term care needs, you may want to contact your State
Attorney General Office or your State Department of Insurance.
Listed below are some opportunities and requirements/limits for viatical
|Viatical Settlements Opportunities:
||Vitical Settlements Requirements/Limits:
|You can get money immediately, although it will be less than
your original death benefit. You can use the money to pay for
your long-term care needs.
||If you live longer than expected, you might need more money
to pay for your long-term care needs.
|If you don’t qualify for a long-term care policy, this might
be an option for you to pay for your long-term care needs.
||The settlement costs might not be enough to pay for your long-term
|After making the settlement, you don’t need to continue making
premium payments for your life insurance. This is because you
don’t own the policy.
||The death benefit will go to the third party. You won’t be able
to leave anything to your heirs (family or friends).
|This may be tax-free. For more information, you should check
this out with the Internal Revenue Service (IRS).
||Most people can’t get these types of settlements because their
life expectancy is considered to be more than five years.
Related: Reverse Mortgages vs. Viatical