Viatical Settlements From Life Insurance Funds for the Terminally Ill

A terminal diagnosis for you or a loved one represents an emotional time. Financial pressures might add to your stress, but a viatical settlement could provide you with money while you are still alive. If you are wondering what is a viatical settlement, the concept is straightforward. If you have a life insurance policy and your life expectancy is no more than 24 months, then you could have an opportunity to sell your life insurance policy and receive a partial payout of its value.

Are There Restrictions on the Use of Settlement Funds?

No. The money that you receive will be yours to spend as you wish. For some people, this could mean paying medical bills, paying off debts, paying for household bills due to an inability to work, or financing a dream vacation. Taking a settlement could also allow you to avoid paying more premiums, which can be costly for older individuals.

You do not have to be a specific age to qualify for this type of settlement, but documentation of your terminal medical condition will be necessary. You should consult a tax adviser before pursuing a viatical settlement to ensure that you are eligible to receive the distribution without incurring federal income taxes.

Determining the Value of a Settlement

A definitive answer cannot be made about a settlement’s value without analyzing factors specific to an individual. The size of your policy, its contract terms, your age, premium amount, and medical condition will all play a role in calculating the final settlement amount. Depending on your circumstances, you could get 50 to 75 percent of your policy’s face value.

To explore the potential of a viatical settlement for achieving financial security during your remaining days, you will need to provide a life insurance settlement company with information about your terminal illness. This paperwork will include an assessment from your physician and a release form for your medical and health insurance records. A life insurance settlement company could provide greater detail about what is a viatical settlement and how it could free you from money worries.