| Death and taxes may be the only sure things in life, | | | | They then become the beneficiaries on the demise of |
| and speculating on the former may sound | | | | the original policyholder. |
| disconcerting to many. Viatical settlements involve | | | | Each company will have their own rules for buying the |
| selling the life insurance policy of a terminally ill person | | | | policies. They will likely run a checklist on your policy. |
| to a company which pays a lump sum cash amount to | | | | For example, most companies prefer that a |
| the policy owner in return for the policy. The | | | | policyholder has had the policy for at least two years. |
| companies buy the policy at a reduced rate of the | | | | They may also ask you to sign a release allowing |
| face value, sometimes as much as 50% of the face | | | | them to access your medical records. This is normal |
| value, and then collect the death benefits after the | | | | as they need to know the medical life expectancy in |
| person's demise. | | | | order to determine the present value of the future |
| Viatical settlements are basically a high-risk transaction | | | | payment. Let's assume that your policy has a face |
| for the investor, as life expectancy is totally | | | | value of $100,000. That money will be worth far more |
| unpredictable. The viator (seller of the life insurance | | | | next year than it will 15 years from now. |
| policy) may outlive the predicted life expectancy | | | | You should not accept payments on installments. As |
| assigned to him by his doctors. If so, the investor who | | | | per New York State law, all funds must be received at |
| buys the policy will stand to lose, or at a minimum see | | | | the time of sale. Also, there should be no hidden fees |
| his rate of return greatly reduced. The longer the | | | | involved at the time of sale. If a fee is undisclosed until |
| person lives, the lower is the return value of the policy. | | | | the final transaction occurs, it should be taken as a red |
| A terminally ill person may wish to sell his policy to | | | | flag. Why wasn't the fee disclosed initially? If the fee |
| raise cash to in order to ease the financial strains of | | | | was disclosed earlier, would that have made another |
| his final days. For many people with terminal diseases, | | | | company's offer more attractive? These are |
| this is the only method they have to be able to provide | | | | questions you should consider. |
| for their healthcare treatment in their final months. | | | | Remember, when selling your life insurance policy, the |
| While it may sound like investors prey on these people | | | | same guideline applies as buying a new car: never |
| who in turn become victims, that is not what actually | | | | accept the first price quoted, and always shop around |
| happens. | | | | for price comparisons. Only then will you be sure to |
| There are many private companies as well as | | | | receive the best price on your viatical settlement. |
| individual investors who purchase life insurance policies. | | | | |