No one wants to consider how their lives will end. After all, it’s a morbid thought to contemplate what happens when we ultimately leave this world. However, it’s something that must be considered. You can’t take your belongings and assets with you when you pass away, so what do you do with them?
Many people in the United States are likely to have life insurance. For those who don’t, this is a policy that will pay out a lump sum of cash to loved ones when a policyholder dies. The payout, otherwise known as the death benefit, is there to help pay for funerals or to manage any posthumous costs and financial matters. The thing about standard insurance is usually that you don’t really want to have to use it, but you’re grateful for it if you do. Therein lies the quandary with life insurance policies. The person who has paid into them for years is not the person who gets to receive the benefit of it.
Now, before anyone takes that to mean that you should cancel your life insurance policy right away, it needs to be stated clearly that they’re incredibly important, and they should be considered. Approximately 40% of U.S. citizens don’t have life insurance, and that isn’t a good statistic, especially given the events of the 2020 global pandemic. However, naturally, there are going to be people for whom a life insurance policy will not be as useful or can’t be maximized for its potential. Here, we’ll be looking at how to handle a viatical settlement in place of a life insurance policy.
Who will need a viatical settlement?
To know who would benefit from changing their life insurance policy, it’s best to first know what is a viatical settlement. In short, a viatical settlement is the surrender of a life insurance policy in return for a lump sum of cash upfront. This payout will be less than the death benefit and is made by the new “beneficiary” (the third party who is buying the life insurance), who will then go on to continue making the monthly premium payments until the original seller passes away. At that point, the beneficiary is able to claim the death benefit payout themselves.
There are a few prerequisites to a viatical settlement that may explain when they’re best used. Firstly, a life insurance policyholder can only surrender their policy if they have a terminal illness, or chronic condition, which is going to limit their life expectancy to two years or less. It’s possible for a third party to buy a policy from someone who hasn’t got a terminal illness or has a longer life expectancy, but this is known as a life settlement and is a different type of policy. Secondly, a viatical settlement broker (such as those available through the American Life Fund), will aim to get as much as possible for the cash surrender value, but 70% is generally considered to be a great option. Once the transaction has taken place, the original policyholder (or Viator) has no more involvement in the process and is free to enjoy the payout as they see fit.
What can a viatical settlement be spent on?
The easy answer to what can a viatical settlement be used for is anything you want.
Viatical settlement brokers, and viatical settlement companies, have no interest in why you would want to perform a viatical settlement transaction. That isn’t to say that they don’t care about making sure you get the best cash surrender value from your settlement that you can, just that they know that the likelihood is that there is little time left to enjoy life.
Often, viatical settlement transactions take place to pay for end-of-life care and ensuring that the final days are indeed comfortable. However, it could well be because the funeral and expenses have already been paid for, and so there are no financial obligations left to pursue. A viatical settlement could just as well be spent on a vacation, a road trip, or ticking off items on a bucket list, as much as it could be for healthcare providers and bedding.
Another Suggestion to Add to the Viatical Settlement
You could use your viatical settlement in tandem with reverse mortgage lenders to ensure that your loved ones aren’t left footing the bill for your property after you pass away. Reverse mortgages are often defaulted upon in the event of a tenant’s passing. What’s more, is that these types of monthly payments are normally marketed and pushed towards those at retirement age who want less hassle with their finances in their golden years. As a result, when they become due as a result of a tenant’s passing, which is more likely due to age-related illnesses or natural causes, it falls to the loved ones to take care of the mortgage, and even an inheritance is unlikely to cover the costs.
However, companies such as HCS Equity, which are reverse mortgage lenders in California, aim to reduce the pressure and minimize the mortgage due to more manageable and realistic payment options. If you have a reverse mortgage and opt for a viatical settlement that will eliminate a life insurance death benefit-based inheritance for your loved ones, then it might be a good idea to put them in touch with reverse mortgage lenders before your time comes to an end.
Other Possible Uses for Your Viatical Settlement
Furthermore, a viatical settlement could provide peace of mind through other ways, such as by helping those who are left behind get justice for those who have fallen in ways that weren’t their fault. If a condition has been brought about by medical malpractice or negligence and therefore requires an expensive standard of care in the final days, then it might be worth seeking legal counsel from medical malpractice attorneys such as Davis Kelin. These New Mexico medical malpractice attorneys have been making a name by taking the legal fight against those who should be held responsible. If you believe you have fallen afoul of such negligence, then give them a call.
The business of viatical settlements grew in popularity quite significantly over recent years, and with these benefits, it’s not hard to see why. They’re easy to get started too‚Äîjust reach out to a viatical settlement broker for a quote, and let them take it from there.