If you are thinking of selling your insurance policy as a viatical Settlement, you already know it is an important financial decision and you already know the gut-wrenching motivation behind even exploring the option. Please just make sure to explore all of the viatical settlement options that are available to you. You may qualify to sell a portion of your policy and still maintain a portion for your family. A viatical settlement does not have to be an all or nothing proposition, though some buyers will make it sound that way.
To qualify for a viatical settlement and the tax advantages that are associated with a terminally ill person selling their insurance policy to an institutional fund, your life expectancy has to be less than two years. By state statute, in most states, that would qualify your settlement to be treated as an advance of your death benefit and render it tax free. Your gross payment would also have to be at least 50% of your face amount as well. Half the value of your life insurance policy is not typically considered a high offer if you have less than two years to live, though depending upon the premium expense of your policy, it could be.
Viatical.org works as a platform to compliantly and securely get your policy and health information in front of as many viatical settlement purchasers as possible and then make sure that it is closed compliantly with a licensed viatical provider in your state. There is no viatical settlement broker or middleman between you and the viatical settlement purchaser except for the licensed provider closing the transaction.
It costs nothing to have your policy appraised if you qualify and we can usually tell you if you are likely to qualify over the phone without you having to submit anything, If you are likely to qualify and wish to sell your life insurance policy, our electronic platform will HIPPA compliantly gather your medical information and insurance illustrations and verifications. Though some physicians and insurance companies require their own forms, you can usually authorize everything digitally on our platform.
Do You Qualify?
Does your life insurance have hidden value?
Every case is different. Please fill out this form to learn if you qualify.
What are Viatical Life Settlements?
Viatical Settlements Can Get You Needed Cash Now
Viatical settlements involve the sale of your life insurance policy once you have become chronically or terminally ill. Depending on your type of life insurance coverage and insurance carrier, you may have certain policy provisions within your life insurance policy that allow for an advance of your death benefit. This life insurance settlement option should be explored, especially if you need cash to pay for the high cost of care. You will most likely find that if you are expected to live beyond six months and have no cash surrender value; your financial options are can often be very limited with respect to your life insurance, apart from a viatical settlement.
It may be easier to associate the sale of your life insurance policy with real estate. There are typically a buyer’s agent and a seller’s agent in a real estate transaction with respective fiduciary responsibilities. You can go directly through the selling agent if you are purchasing a home and may get a better deal from the agent with respect to their fee, but you may also put yourself in jeopardy of making a mistake in assessing value that no one on your side of the transaction is aware of.
Real estate value is typically determined by an appraisal. The same is somewhat true with viaticals. With real estate, your location, structures, land and various other variables are assessed against recently transacted property closings. Though your insurance company, policy size and type are all factors in the value of your viatical settlement; the largest variable is your LE or life expectancy.
One of the most important viatical companies in the industry works behind the scenes. The life expectancy provider assesses your life expectancy based upon your medical information and your physician’s prognosis of your health. Once the life expectancy provider has provided an LE, the viatical providers can then do their internal calculations on your policy to arrive at a value in the viatical market.
What type of policies qualify for a viatical settlement?
Convertible Term Insurance
Term insurance that can be converted into a permanent life insurance policy often has a hidden value for someone who is even in good health if they are in their 70’s, but as a life settlement rather than a viatical settlement. Your convertible term policy almost always has some value if you are chronically or terminally ill. Many institutional funds cannot buy term insurance, or purchase insurance policies on people under age 65.
Annual Renewable Term Insurance
Unless someone has had a significant slippage in health, Annual Renewable Term Insurance (ART) can be difficult to sell in the secondary market. The premiums on ART policies increase each year and if someone outlives life expectancy, the cost of the policies in the later years can be 15% or 20% of the face amount, making it risky for an investor in life settlements. Whereas. if you have had a significant slippage in health that impairs your life expectancy, you could qualify to sell an annual renewable term policy, depending on the policy. There are very few funds who purchase annual renewable term insurance.
Group Life insurance
Yes, it is possible to sell your group life insurance policy to a viatical purchaser, but it can be involved based upon the structure of your plan and the carrier. Some plans are convertible, and others revert to very expensive ART so it is truly a case by case basis, primarily driven by your health. There are very few funds who purchase Group Life Insurance.
Variable Life Insurance
Yes. Variable life insurance can be sold as a viatical settlement. Security laws as well as state insurance laws come into play and the investor pool is limited, as many funds cannot and will not look at a variable insurance policy which is out for bids in the market.
Universal Life Insurance, Flexible Premium Life
Universal Life Insurance is the most desired type of policy in the secondary market for insurance. The vast majority of all policies sold are universal life insurance policies. Life settlement purchasers have varying parameters with respect to your age, the size of your policy and your health, but the secondary market for universal life insurance policies is brisk.
Whole Life Insurance
Whole Life insurance can be sold as a viatical settlement, but the pool of funds that purchase whole life insurance is not large and whole life does not usually qualify for a life settlement. So, unless your health has slipped, you will likely not be able to sell your whole life insurance policy.
Any and all other life insurance, residual death benefits, etc..
If your health has slipped, please call us to check.
How sick must you be to qualify for a viatical settlement?
If you qualify to sell your life insurance policy, it does not make it a viatical settlement, even if you are sick. You must be terminally ill to qualify for a viatical settlement. A prognosis with a life expectancy of less than two years qualifies your settlement as a viatical and avails favorable tax treatment.
If you are terminally ill but have a life expectancy of greater than two years you are still likely to qualify for a very large viatical settlement, but the potential tax ramification of the sale of your life insurance policy and treatment as a life settlement and not a viatical settlement can be large and real. Tax advice should always be sought if you are selling your life insurance policy for more than you paid into it or your cost basis.
If you are perfectly healthy and at least 70 years old, you could qualify to sell your convertible term insurance, universal life insurance and maybe the right variable policy, but for the most part that is it. A healthy 75 year old can easily have a life expectancy of 15 years, depending upon their medical records and family history If a purchaser of your life insurance policy is planning on paying premiums for 15 years because you are healthy instead of just 2 or 3 or 5 because of your catastrophic illness, your long term policy provisions and guarantees are very important.
Purchasers of Viatical Settlements
Purchasers of viatical settlements often do their own internal underwriting, while at the same time reviewing all of the independent third-party reviews of your medical records. Assessments of your health can be all over the place and it is imperative to get multiple bids. It sounds morbid, but it is the actual science of morbidity whereas an independent party is trying to guess how long you are going to live and that variable, alongside of how much your premiums will be over that period of time is what drives the valuations for purchasers of viatical settlements.
Most purchasers of viatical settlements work with a viatical settlement provider which is licensed to purchase insurance policies from terminally ill patients within the patients’ state. Though viatical settlement providers are licensed as purchasers of viatical settlements, most do not purchase for their own account and work as a facilitator of the transaction for the viatical settlement purchaser. Viatical settlement provider fees are not professed, and they represent the viatical purchaser. Publicly traded providers indicate that they average 30% of the proceeds and there have been other reports indicating providers keep just over 20% on average.
Viatical settlement companies fulfill certain and distinct roles in the viatical settlement process. A viatical settlement provider typically fills orders for viatical investments or often purchases viatical settlements for their own account. Whereas a viatical settlement broker has a fiduciary responsibility to you, the viator. Viatical brokers should shop your insurance policy to the highest bidding viatical settlement providers that are licensed in your state.
Viatical settlement brokers maintain a fiduciary capacity. Most life settlement brokers charge 30% of the sales proceeds of your life insurance policy and typically, but not always, cap it at 6% of the face amount of your policy. That 20% to 30% is off the top of the number they get from the viatical provider, having already kept 20% to 30% of the purchase money extended buy the viatical settlement purchaser.
Viatical Settlement Appraisal
A viatical settlement appraisal or really the valuation of any life insurance policy relies primarily upon your age, health, the size of your policies, your premium amount and your policy provisions. The largest factor is life expectancy or (LE) and a third-party life expectancy report based upon your medical records can vary wildly and influence the value of any potential settlement wildly in a positive or negative direction.
It is not uncommon to see life expectancy reports that vary by many years. Life expectancy companies are independent, utilize their own approaches and methodologies and are trusted by varying funds to varying degrees. We’ve seen life expectancies on the same individual come back at 42 months and 120 months, from two different life expectancy companies, but based upon the same underlying medical information. Though it is imperative to secure a life settlement appraisal, you’ll never truly know what the value of your life insurance policy is until bids are returned.
Viatical Settlement and Taxation
Life expectancies have been a hot topic in the life settlement and viatical industry. There are typically few complaints from the viator or seller side. Once you sell your insurance policy for cash, your responsibility is complete apart from providing quarterly updates of health status and address changes.
Though viatical settlements, life settlements are essentially the same thing, their taxation varies. The definition of a Viatical is selling your policy when you have less than 24 months to live. This stipulated period is crucial in assessing viatical settlement taxation.
If your life expectancy is beyond the definition of terminally ill as defined by your state, the proceeds of your life settlement may be considered partially taxable, based upon what you have paid in, cash value and the ultimate sales price. Viatical settlement taxes are not typical if you are deemed terminal by your state’s definition. A tax expert should be consulted in all cases once you have a projected value of your insurance policy.
The fact that some life settlement proceeds may be deemed as ordinary income and may affect certain senior government programs that are based upon income thresholds is often overlooked.
Do Your Homework
You should explore all of your options and always secure your own, independent viatical settlement appraisal before initiating the sale of your life insurance policy. The viatical settlement process can seem onerous, but much stress can be alleviated if you know on the front end what your life insurance policy could be worth in the secondary insurance market as a viatical life insurance settlement.
Call for an appraisal before you attempt to sell your life insurance policy for cash.
Viatical Settlements: Unlocking the Hidden Value in Your Life Insurance Policy
Understanding Viatical Settlements
If you’re seeking a way to convert your life insurance policy into immediate cash or considering the sale of your term life insurance, it’s worth exploring the concept of viatical settlements. Viatical settlements offer policyholders the opportunity to sell their life insurance policies to investors in exchange for a lump sum payment, providing crucial financial relief precisely when it is needed.
Viatical settlements prove particularly beneficial for individuals burdened by medical expenses, long-term care costs, or other financial challenges. By selling your life insurance policy, you can access a significant amount of funds that can be allocated towards medical treatments, debt repayment, or any other pressing financial obligations.
The Process of Selling Your Life Insurance Policy
The process of selling your life insurance policy through a viatical settlement is straightforward. First, you must identify reputable buyers specializing in viatical settlements. These buyers, often known as viatical settlement companies, evaluate the value of your policy based on factors such as your age, health condition, and policy terms.
Once you’ve connected with a reputable buyer, they will assess your policy and extend an offer if it holds value. Should you accept the offer, the buyer assumes responsibility for future premiums and becomes the new policy owner and beneficiary. In return, you receive a lump sum payment that can alleviate your financial burdens swiftly.
Advantages of Viatical Settlements
Viatical settlements offer a range of benefits, the foremost being immediate access to cash. Unlike surrendering your policy to the insurance company or allowing it to lapse, a viatical settlement ensures you receive a substantial sum without any unnecessary delays.
Furthermore, viatical settlements grant you flexibility and control over your financial situation. You have the freedom to utilize the funds in a manner that best aligns with your needs, whether it involves covering medical expenses, clearing debts, or making strategic investments to safeguard your future.
Unlock the Hidden Value of Your Life Insurance Policy
Unlocking the hidden value of your life insurance policy through a viatical settlement can provide you with immediate financial relief and newfound flexibility. By partnering with reputable viatical settlement companies and seeking expert guidance, you can confidently explore this option and unlock the untapped potential of your life insurance policy.
To learn more about viatical settlements and explore your options, reach out to us today. Our team of experts stands ready to assist you in having your policy appraised for its hidden value by a licensed buyer in your state. Discovering if you qualify typically only requires a brief 5-minute phone call and there is never any obligation.
Viatical settlements offer benefits to both policyholders and investors. Individuals with a life-threatening illness can access immediate cash by selling their life insurance policy to a viatical settlement purchaser. This arrangement can help cover medical expenses, improve quality of life, or address other financial obligations. Investment funds, on the other hand, can potentially earn attractive returns by purchasing life insurance policies at a market driven discount and receiving the policy’s death benefit when the policyholder passes away.
To qualify, you must meet certain criteria:
Health Condition: Viatical settlements are commonly available to individuals with a terminal or chronic illness.
Policy Type: Different types of life insurance policies can be eligible, including term life insurance, universal life insurance, and whole life insurance.
Policy Value: The face value or death benefit of the policy plays a role in determining eligibility for a viatical settlement. Policies with higher face values often offer greater potential for substantial settlements.
Age: While age is not a sole determining factor, it can influence the evaluation process. Generally, older policyholders may have a higher likelihood of qualifying for a viatical settlement.
In most cases, the proceeds from a viatical settlement are typically tax-free. The Internal Revenue Service (IRS) considers the funds received as an advance on the death benefit rather than taxable income. However, it’s crucial to consult with a tax professional to understand the specific tax regulations that apply to your situation.