Applying for Viaticals

2007-03-08 10:33:40

( Financial )



Viaticals also known as senior life settlements are a way for terminally ill people to obtain cash in exchange for the death benefits of their life insurance.

The policyholder sells their life insurance to a viatical broker or viatical settlement company who then becomes the owner of the policy. The viatical broker may continue to make premium payments on the policy and can claim the actual benefits when the policyholder dies.

Some people apply for viaticals in order to pay for their medical expenses or simply because they can no longer afford to pay for their premiums.

There are several conditions for one to qualify for viatical life settlements: you must have owned the policy for at least two years, you sign a waiver or release, you provide the broker with access to your medical records and you only have two years or less to live.

After a policyholder is diagnosed with a terminal disease and is given two years or less to live, the policyholder approaches a viatical broker who obtains the necessary documentation and information including your medical records for their review. If the broker decides to buy your policy, a canvass for the best funding company is made to find one that can give the best amount of money for your policy.

Once the investor is chosen, the broker gives you the specific details for the settlement. When an agreement is made, money is offered to you and papers are signed.

There are several settlement options to consider as far as viaticals are concerned, aside from receiving the cash as a lump sum amount:

The interest option allows for the beneficiary to receive only the interest on a regular basis. The principal amount is kept by the viatical life settlement company and is released only upon certain conditions.

A fixed monthly amount is paid to you during your remaining days under the life refund option. Sometimes it is possible for the beneficiary to receive more than the agreed amount. If one dies after a short time, the beneficiary would have received a smaller amount than agreed. The amount of payment received each month is determined by the beneficiary’s health status and age.

Payments are released periodically for two lifetimes instead of one under the joint and survivor option. This is a common option for married people and provides the surviving spouse with regular payments after the primary beneficiary passes away. The amount of payment is dependent upon the beneficiary’s age and health condition.

For individuals who do not wish to avail of viaticals, an accidental death benefit on their life insurance policy (under certain conditions) can allow one to receive some of your death benefits while they are living. Not all insurance policies provide for this, and it is therefore recommended that you check your existing life insurance policy if you have one. The amount of accidental death benefit that you receive will be deducted from the amount released to your heirs when you die.


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