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What Viatical Settlements Are and How They Work

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What do you think of when you think of life insurance? Understandably, most people only think of death, dying, and insurance premiums when they hear the term. It makes sense when you consider the inevitability of the end of your life related to an insurance policy. However, you may not know that your life insurance policy can be more than a death benefit for the beneficiaries.

Viatical settlements are one of the ways you can turn a life insurance policy into much-needed emergency funds. There are, of course, rules that govern how a person can get a viatical settlement and how it can be used, but they’re often the last option for people in desperate need of funds for medical reasons. Please continue reading to learn what viatical settlements are and how they work.

Did you know that you might be able to cash in on your insurance policy?


Life insurance isn’t something that people are constantly champing at the bit to discuss. As a matter of fact, many people would rather leave the bit in place than talk about death benefits and beneficiaries but don’t doesn’t take away from the fact that it’s something we all have to face.

Unlike your health insurance policy, which you have to get sick to benefit from, there are ways in which a policy owner can cash in your life insurance policy while they’re still alive. You can sell your insurance policy, which is called a life settlement, and whole life insurance even allows a policy owner to borrow against an insurance policy.

Viatical settlements are another way to reap the cash value of your insurance policy, but they’re quite different from life settlements. While anyone with life insurance can try to get a life settlement, there is a different set of rules for viaticals, which we’ll discuss in the next section.

What is a viatical settlement?


A viatical settlement is a life insurance policy payout for people who are terminally ill. Since viatical settlements are for people who have a terminal illness and need money for end-of-life care and living expenses, you don’t have to pay taxes on your policy’s cash value, which is one difference between viatical and life settlements.

The starkest contrast between viatical and life settlements is how one qualifies. Since viatical settlements are for people with a terminal illness, you have to have a life expectancy of fewer than 24 months to qualify for this sale of your policy. Furthermore, the shorter your life expectancy, the larger the cash value of your payout will be. One thing you should know about viatical settlements is that they’re final.

Numerous brokers around the United States provide viaticals, so you should do your due diligence to find top viatical settlements brokers. American Life Fund has been helping people all over the U.S. get the money they need from their life insurance policies for end-of-life care and even experimental treatment.

Before getting a viatical settlement, it would be a good idea to talk to a financial advisor you trust to get as much information as possible before signing away your life insurance policy. It’s also important to talk to your beneficiaries and dependents to inform them about your decision, as they will no longer be the beneficiaries of your life insurance policy.

What are the ways you’re allowed to use a viatical settlement?


Even though viatical settlements are an end-of-life financial option, you can use the payout however you like, as you can with a life settlement. However, most people with a terminal or chronic illness use the payout to offset their medical bills or pay off debt. With that being the case, it’s still at your discretion as to how to your funds. Many people use their viatical settlement to cross some things off their bucket list or do some traveling. How to spend your funds is totally up to you.

If you have a catastrophic illness and your bills are more than your health care insurance policy covers, a viatical settlement is an option to pay for your care and living expenses. Even though it’s a death benefit, your life insurance policy can benefit you greatly in the here and now.