HERE’S HOW VIATICAL SETTLEMENTS ARE DIFFERENT FROM LIFE SETTLEMENTS

When you feel the insurance policy you own is not wanted or can’t be afforded any longer, it’s better to sell your policy right away. Various life insurance settlement options are readily available. When it comes to the life settlement, you may find certain complications while getting through its way. As the life insurance policies hold certain cash value, you can sell your policy to a third party investor so that you can receive monetary funds in return. Because of the lack of awareness, most people let go of their insurance policies as they lapse. Moreover, this is how all the money goes wasted even after paying for the premiums regularly.

Life settlements and Viatical settlements are two different terms that may seem to be similar in the first place but are different. Even though both of them are concerned with selling life insurance policies, certain features make them distinct.

A life settlement refers to selling an existing monitoring remote teams life insurance policy to a third-party investor for an amount which is higher than its cash surrender value but lower than the death benefit. This type of settlement is mainly designed for people who have higher life expectancies. Life settlements are amazing as the policyholder gets to receive a cash payment for an unaffordable or unwanted insurance policy. In return, they get the alternative to use that money for whatever reason they want, along with financial relief. Selling a life insurance policy during retirement or at old age is beneficial as the policyholder receives significantly more cash. Of course, it’s better than surrendering your insurance policy or letting it lapse.

A viatical settlement also involves selling your life insurance policy, but this type of settlement is offered to only those policyholders who are terminally or chronically ill. A viatical settlement is particularly designed for those policyholders whose life expectancy is between 2-4 years. This is to prevent the family from bearing expensive medical bills once the policyholder passes away. The money the person receives from a viatical settlement can be used to pay for his medical expenses during those 2-4 years. Also, viatical settlement pay-out is completely tax-free for the individuals who are terminally ill (only for proceeds that involve long-term care services.)

Viatical settlements and Life settlements may seem insignificant to you, but they make more sense in the following situations:

1. When your policy is going to be expired.
2. When you don’t want your policy to keep going.
3. When there is no beneficiary for your policy.
4. When you want to liquidate/settle your assets.

When you’re looking for a life settlement provider, always make sure that the company you choose is legit. It means that the company should have the license and proper documents related to life settlements. Sometimes, the provider can also be the investor.

It’s very important to look through all the options available with the help of thorough research. A life settlement can help you receive the maximum amount of cash out of your unwanted life insurance policy. If your life insurance policy has a higher value, you can go for a life settlement and draw out the cash to use it for other major expenses.