Settlement options for life insurance have gained the attention of the masses and now, more people are finding their way to getting a life settlement. Life settlements are all about selling your unwanted life insurance policy to a third party.
Life settlements become a ‘Viatical settlement’ if the policyholder (who is selling the life insurance) is terminally ill (having a life expectancy of 2 years or less.) However, a person with a life expectancy of more than 2 years would opt for a life settlement. The concept of viatical settlements has emerged as a ray of hope for those policyholders who are diagnosed as terminally ill. Usually, the difference between both the terms lies within the health status and life expectancy of the policyholder and how that could bring an impact on the tax treatment of the cash received from the sale.
Since both the parties receive benefits from life settlements but still, organizations like ‘SETTLEMENT BENEFITS ASSOCIATION’ focus on ensuring maximum cash value for the life insurance policy, keeping all state rules and regulations in mind.
Viatical settlements allow the sale of a life insurance policy at a price that will attract the policyholder and that will bring profit to the settlement company. Yes, an extremely fair deal. Some of the other benefits of viatical settlements are:
- A companion in need, a rapid source of money-
When you’re diagnosed with some terminal illness, you may require a large amount of money to take care of your hefty medical/hospital bills and have a good quality of life before it ends. A viatical settlement is a good way that allows you to sell your life insurance policy at an attractive price, where you can get the cash in hand in one go, immediately after the sale. You can also invest the money in living a life of satisfaction and completeness until the time you have in hand.
- Relief from monthly/annual insurance premiums-
In cases where you find out that you don’t have much time left because of your terminal illness and you don’t have anyone to leave your riches to, you can go for a viatical settlement. As you grow older, your premiums will go up, leaving your pockets empty. Paying for the policy premium that you don’t want or can’t afford isn’t a good idea. On an ideal note, when you sell your insurance policy, the investor/buyer becomes the new beneficiary of the policy who is responsible for paying all future premiums. So, a viatical settlement is an amazing way to relieve yourself from paying these unwanted or unaffordable insurance premiums.
- Risk-free and ‘almost-fair’ transaction plan-
There is no such risk when you’re opting for a viatical settlement because all you need is a life insurance policy to be sold. Since viatical settlements have no tax liability, you can go for this option without being shilly-shally.
The amount that the seller receives in a viatical settlement is higher than the policy’s cash surrender value. Through the process of getting a viatical settlement, the policyholder who is terminally ill receives the cash which he can invest in self-care for however longer he lives.
Viatical settlements are an amazing companion as they come to your rescue when you’re fighting some terminal illness. Therefore, it’s highly recommended that you take advice from a settlement advisor to gain a deeper understanding about viatical settlements. This simple step can make your limited years of life much relaxing, of course, for the better.