Viatical Cash Settlement

2007-03-08 10:33:40

( Financial )



What is a Viatical Cash Settlement?
A viatical cash settlement is the sale of a death benefit under a life insurance policy by a terminally ill person. It gives the owner of a life insurance policy access to immediate cash. Through a viatical cash settlement, the owner of a life insurance policy can indirectly benefit from the policy before death. This kind of cash settlement is a good way to help persons terminally ill receive money in critical times of need.

How Does a Viatical Cash Settlement Work?
A viatical cash settlement is essentially a contract of sale. There are two parties to this contract. The owner of the policy is the first party, and the purchaser of the benefit is the second. Under the contract, the owner designates the purchaser as the person entitled to receive the death benefit of the policy. This gives the purchaser the legal right to receive the insurance proceeds upon the death of the owner of the policy. When the contract is perfected,the purchaser will pay money. A written and signed contract will remain as evidence of the transaction. Notarization of the document is required in most countries.

A Short History of the Viatical Cash Settlement
The viatical cash settlement began as a means to give AIDS patients access to money for medical treatment. It later spread as a practice embraced by many terminally ill patients who could no longer work and had little or no savings. The viatical cash settlement is now a means for terminally ill patients to avoid burdening their families with medical expenses.

The Financial Viability of Viatical Cash Settlements
A viatical cash settlement provides benefits to both the owner of the policy and the purchaser. The price agreed upon is usually less than the face amount of the policy, so that the purchaser is allowed a future profit. On the other hand, the owner of the policy gains immediate access to cash.


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