If you are contemplating the sale of your life insurance policy to a viatical settlement company, it helps to understand the viatical settlement process. Trying to explain the process can be difficult because it is unfamiliar territory to most people. It is really not any more complicated than the process of buying a life insurance policy. Instead of contacting an insurance company or insurance agent to purchase a life insurance policy, you need to contact a life settlement provider or a life settlement broker to sell your existing life insurance policy.
Step 1 – Overview and policy evaluation
You should start by educating yourself about the process and getting a valuation of your life insurance policy so that you have a starting point. Make sure you understand everything. Ask questions to clear up any confusion.
Step 2 – Decide if you want to use a Viatical Settlement Broker
Choosing to sell your life insurance policy is a big deal and you want to make sure that the transaction is executed without any problems. Viatical settlements are offered in a competitive secondary market for insurance and there is always room for negotiation. For most people, it is better to hire a broker to present your policy to a number of different potential buyers. A good broker can often get you more money than you could get by trying to shop your policy around on your own.
Step 3 – Providing the policy
To get the viatical settlement process started, you must provide a copy of your policy illustration to either your broker or the viatical settlement company that you select. Each policy has to be valued to determine whether an offer can be made and how much that offer will be.
Step 4 – Filling out an application
The insured will need to fill out an application that provides information about the insured’s health and medical history. Also, you will need to list the names and addresses of any doctors or medical providers that treat or perform healthcare services for the insured.
Step 5 – Processing the application
Once the application has been completed and submitted, brokers or providers secure a life expectancy estimate from a third party, at their expense. If you qualify under your state’s guidelines as well as the parameters set by the seller, your application goes on to the offer phase.
Step 6 – Offer and Acceptance
At this point, you may receive an offer to buy your policy that you can accept or decline. You are also free to try to negotiate a higher offer, but the buyer has the right to stand firm on the original offer. If you agree to the offer, there are only a few more steps to complete the viatical settlement process.
Step 7 – Proceeds of the settlement are placed in escrow
When you sign the contract agreeing to the settlement amount, those funds are placed in an escrow account. Those funds will be distributed to the seller upon the completion of the transaction.
Step 8 – Change of ownership and beneficiary
Forms will be submitted to your life insurance company to change the ownership and beneficiary of the policy to the viatical settlement buyer. Once written confirmation has been received from the insurance company confirming that the changes have been made, the escrow agent releases the proceeds of the settlement contract to the seller of the policy.
When will you get your money?
While there is no set guideline for how long it will be from the time you start the viatical settlement process until you receive your money, generally, it can take between 4-10 weeks from start to finish. a few of the factors that influence when you will get your money include:
- How quickly physicians respond to information requests
- The responsiveness of the seller’s life insurance company
- The length of the review by the viatical settlement company
- The number of viatical companies or viatical settlement providers who make offers
Although it will take longer than a day or two to receive a viatical settlement, that should not necessarily discourage you to fill out an application. If the insured’s condition is such that he or she is not expected to live beyond a month, then you are probably better off holding on to the insurance policy and collecting the death benefit.