ttolk said:There is a practice available to everyone that the vast majority of people are unaware of called
Life Settlements or Viaticals. A person can sell their Life Insurance policy and receive up to 85%
of its face value, tax-free. This lump sum cash settlement can then be used as the policyholder
sees fit. Granted this may not be for everyone, but for many people this could be a real blessing.
A person can relieve themselves of the financial burdens that inevitably mount when dealing with
terminal illnesses while living out the remainder of their life with dignity. These funds can also
be distributed as gifts ($10k/per yr) tax free, to the beneficiaries.
For more information contact
aids.org104 viaticals.htmlOpen ↗ WHY DO PEOPLE SELL THEIR LIFE INSURANCE POLICIES?
Many people with life-threatening illnesses decide to sell their life insurance policies to provide
extra cash for various expenses. Life insurance is usually a way to provide cash to your survivors.
There may be other ways to supplement your own resources and still provide for the beneficiaries of
your life insurance policy.
WHO BUYS LIFE INSURANCE POLICIES? Investors buy life insurance policies from people who are not
expected to live very long. The investors buy the policy at a discounted rate. When the person who
sold the policy dies, the investor receives the full amount of benefits from the insurance company.
HOW CAN I SELL MY LIFE INSURANCE POLICY? Selling a life insurance policy is called "viatication". If
you want to sell a life insurance policy, you can sell it directly to a viatical investment company,
or you can deal with a broker.
A viatical investment company finds investors who want to buy life insurance policies, and it finds
people who want to sell policies. The company pays the person selling their policy, and when the
person dies, the company receives the life insurance benefits and pays the investors.
A broker normally takes applications from people who want to sell their policies, and presents the
information to several different viatical companies. Brokers will try to find the highest price
available for someone's life insurance policy. The more companies a broker deals with, the
better. Your policy should be reviewed by at least 3 companies.
WHAT ARE THE CRITERIA FOR BUYING A POLICY? Each company sets its own guidelines for deciding how
much it will pay for a policy, and whether there are any other conditions that must be met.
Normally, to sell a policy, you will need to meet several conditions:
Have owned the policy for at least two years with no pre-existing HIV conditions noted. Have
permission from the owners or beneficiaries of the policy. You may need your employer's
permission to sell a group policy you got as an employee. Have a terminal illness. Usually, a
doctor needs to say that you have a limited life expectancy. The more medical problems you
document, the higher the bid you may get for your policy. If you have a high T-cell count,
viatication may not be a good option. Viatical companies may have other rules about the types of
policies they will buy, or the insurance companies they will consider. The companies normally will
review your medical records and decide how much they would be willing to pay. The whole process
usually takes about 6 weeks to 3 months.
HOW MUCH WILL I GET? The amount you will receive for your policy depends mostly on how much longer
you are expected to live. The sooner the investors will receive the life insurance benefits, the
more they are willing to pay.
Before potent antiviral medications were available, viatical companies paid as much as 85% of a
policy's face value. Since the introduction of effective therapies, offers have fallen to
around 30% of face value.
WHAT ARE MY OPTIONS? The viatical industry is new, and was started because people with AIDS were
becoming bankrupt due to their medical expenses. However, you may not have to sell your life
insurance to get money from it. Check with your insurance agent to see if you can:
borrow against your insurance policy, sometimes at a very low interest rate; cash out the policy.
See if it has a "surrender value". use "accelerated benefits", or "living benefits" to pay you while
you're still living.
PRO . . . On the plus side, you might want to sell your life insurance policy because:
You will receive a lump sum cash payment for your policy. You can do whatever you want with the
money. You won't have to pay any more life insurance premiums. You might receive more than the
current cash value of the policy. You don't have to pay the money back, like you would if you
borrow against your life insurance policy. In some cases, the money you receive is tax-free.
. . . AND CON Selling your life insurance policy can have some disadvantages, including:
You might lose your eligibility for some public assistance benefits. This would most likely happen
for benefits that are based on your income and assets, such as food stamps, Medicaid, welfare, and
some Social Security benefits. Your life insurance benefits won't be available when you die. If
you wanted money to go to certain people or organizations, you would have to make those gifts from
the money you get for selling your policy.
People might learn about your health status during the process of selling your policy.
HOW DO I CHOOSE A COMPANY TO BUY MY POLICY? Check with the state insurance department to see if
viatical companies are licensed. Be sure to get offers from several companies.
An organization that represents viatical companies is the Viatical and Life Settlement Association
of America, Washington, DC, (202) 429-5129; viatical.orgviatical.orgOpen ↗
An Internet web site with independent information is Viatical Settlements Information at viatical-viatical-Open ↗
expert.net/
THE BOTTOM LINE If you have a life insurance policy, you may be able to sell it and use the money
however you want to. There are many companies that buy life insurance policies. Each company will
have its own procedures and will come up with its own offer for your policy. Shop around for the
best offer.
Selling your life insurance might affect your income taxes or financial benefits that you currently
receive. Be sure to get good advice before selling your policy. Revised July 26, 2002
moneycentral.msn.com3117.aspOpen ↗ ins.state.ny.usrg108292.htmOpen ↗
tdi.state.tx.usviaintro.htmlOpen ↗
quackwatch.orgviaticalfraud.htmlOpen ↗ The Federal Trade Commission has
pointed out that policyholders should investigate thoroughly before entering a viatical settlement.
Potential investors and insurance companies should also tread carefully in this area.
The key to identifying a legitimate viatical investment is that the life insurance policy was
purchased before the individual was diagnosed as terminally ill [read the rest]
quackwatch.orgviatical.htmlOpen ↗ Viatical Settlements It is seldom wise
for a terminally ill person to cash in a life insurance policy to pay for current expenses because
the net cost will be very high. This 1998 FTC brochure describes why people contemplating such
settlements should investigate carefully.
If you have a terminal illness -- or if you are caring for someone who is terminally ill -- chances
are you're giving a great deal of thought to time and money. You may be thinking about life
insurance, too. It's in that context that you may hear the phrases "accelerated benefits" and
"viatical settlements."
Accelerated benefits sometimes are called "living benefits." They are the proceeds of life insurance
policies that are paid by the insurer to policy holders before they die. Occasionally, these
benefits are included in policies when they are sold, but usually, they are offered as riders or
attachments to new or existing policies.
Viatical settlements involve the sale of a life insurance policy. If you have a terminal illness,
you may consider selling your insurance policy to a viatical settlement company for a lump sum cash
payment. In a viatical settlement transaction, people with terminal illnesses assign their life
insurance policies to viatical settlement companies in exchange for a percentage of the policy's
face value. The viatical settlement company, in turn, may sell the policy to a third-party investor.
The company or the investor becomes the beneficiary to the policy, pays the premiums, and collects
the face value of the policy after the original policyholder dies.
Decisions affecting life insurance benefits can have a profound financial and emotional impact on
dependents, friends, and care-givers. Before you make any major changes regarding your policy, talk
to your friends and family as well as to someone whose advice and expertise you can count on -- a
lawyer, an accountant, or a financial planner.
[read the rest]
