Viatical Settlements: Encash Your Life Insurance Policy

A dire need of money in life can lead people to take dramatic steps. Thanks to life settlement companies, one can lay his hands on a lump sum by selling his existing life insurance policy to the company.

Viatical settlements imply selling off of the current life insurance policy of the policy owner to a 3rd party for a sum greater than the cash surrender amount, but lower than the net death benefit. The company purchasing the same is designated the new policy owner which is entitled to receive the entire policy benefits upon the death of the insured, contingent upon the timely payment of monthly premiums.

The settlement is invoked when the insured suffers from terminal or chronic illness. The insured can be termed chronically ill if he is not in a position to carry out a minimum of two activities necessary for daily living on his own from the essential activities namely eating, utilizing the toilet, taking the shower or dressing oneself. Further, he/she warrants considerable supervision to be protected from being scourged with health and safety issues owing to substantial cognitive impairment.

The American Secretary of Health and Human Services lays down a list of disabilities falling under any of which can render a person chronically ill. Terminal illness implies that the person is afflicted with a sickness or illness that can bring about death with reasonable medical certainty within 2 years.

Life settlement companies purchases a viatical in the line of zero coupon bond wherein the maturity date is uncertain. The return is solely a function of the seller’s life expectancy and the time he/she leaves the mortal body.

Viatical settlements are good ways to exact value from an insurance policy during the lifetime of the owner. The scheme is particularly appeal for people who got hold of the insurance on account of their employment or other investments, but have no wife or offspring to enjoy the fruits of the death benefit.

A company should be chosen based on its clean track record and excellent paying history. The settlement is an excellent way to monetize your life insurance policy to be suitably rewarded during your lifetime, than letting the money fall into unworthy hands after death.