LIFE INSURANCE SETTLEMENTS FOR VIATICAL

2007-03-08 10:33:40

( Financial )



Universal life, whole life and convertible term life insurances usually qualify for life insurance settlements. Policy holders can sell these policies when they feel they do not need the policy anymore, pay for health care costs and premium payments become unaffordable. The purchaser will continue the payment on the premiums of the policy and appoints a new beneficiary who will claim the benefits of the policy when the insured dies.

Life insurance settlements are a better option than surrendering the policy for its cash value which is how policy holders do it before. The creation of a secondary market for life insurance settlements gave policy holders the opportunity to earn more from the sale of their life insurance policies.

Policy holders who are terminally ill can benefit from life insurance settlements by using the proceeds to pay off health care bills. Viatical settlements refer to life insurance settlements for life insurance policy holders who are terminally ill. Terminally ill insurance policy holders must have a maximum of two years life expectancy to qualify for life insurance settlements.

State Insurance Departments regulate viatical settlements or any form of life insurance settlements. It requires brokers of life insurance settlements to have license to operate in the applicable State.

The amount of viatical settlements is lower than the value of the death benefit of the life insurance policy. Age, medical condition, insurance policy type, amount of premium payments and performance of the insurance company in the industry are the factors that determine the value of life insurance settlements. Usually life insurance settlements are provided for policy holders beyond 65 years of age.

Life insurance settlements are mostly tax free up to the amount of premiums you have paid. Tax on the balance of the proceeds of life insurance settlement can be arranged according to your current situation.


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