Terminal illness is a difficult diagnosis to handle, not just for the patient themselves but their loved ones as well. Nearing the end of life, patients look to ensure that their families are accounted for upon their passing. While most people have life insurance policies to act as a safety net in these circumstances, others opt for a viatical settlement. This helps terminally ill patients get the financial assistance they need and, in some cases, give their loved ones some financial peace of mind.

What is a viatical settlement?

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A viatical settlement results from selling one’s life insurance policy for a lump sum cash payout to viatical settlement providers. This income-tax-free settlement is less than the policy’s face value, known as the death benefit, but more than the cash surrender value. The cash surrender value is the sum paid by an insurer to a policyholder if they halt payment on premiums to the plan or seek to enter a different insurance plan to pay into. Life insurance policy owners often leave the expected death benefit to their beneficiaries.

Those who are the recipients of these lump-sum payouts are allowed to use the money at their discretion. In some cases, viatical settlement recipients will use their payout to cover any outstanding debts brought on by medical expenses or otherwise to leave their family on solid footing financially. Viatical settlements can also be used towards end-of-life care, health coverage, and experimental treatments that insurance may not cover. Some recipients made using the funds to allow a family member to take time off work to help them assist in their activities of daily living.

When should I contact a viatical settlement provider?

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Per the National Association of Insurance Commissioners, any person with a terminal illness with an existing life insurance policy may qualify for a viatical life settlement. A settlement provider’s value offers aviator in a settlement investment ranges to as high as 70 percent. Viators often receive the lump sum within just a few business days to almost immediately take care of any outstanding debts. Interested viators may wish to speak with financial planners if a settlement is best for them. It’s a complex process that requires care.

As previously mentioned, viatical settlements can be used for an experimental treatment that your health insurance may not otherwise cover. Private insurance policies will cover certain aspects of coverage for a life-threatening illness, but practices may not otherwise provide possible care alternatives. Viaticals can be used to consider other options within the health insurance marketplace that may cost more in premium payment but is actually wider protection for someone with a critical illness.

Is a viatical settlement in my best interest?

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It’s worth reaching a viatical settlement provider better to understand the subject of a viatical settlement contract. Be sure to consider how much you are currently paying in insurance premiums on a life insurance policy. A viatical settlement broker will lay out what goes into acquiring offers from viators for your policy, from a quote right down to the paperwork for the agreed-upon settlement amount.

It’s important to assess your current financial situation. If you are better off waiting for the death benefit on your life insurance policy, that is a decision that you should make in good faith between you and your loved ones. However, if you feel that the economic benefit of a viatical settlement is right for your health status, take the next steps. If you need funding for long-term care or to eradicate outstanding medical bills and expenses, be sure to evaluate the options presented by a viatical settlement provider.