Life insurance is often considered as a means to help loved ones pay for your final expenses; however, situations may arise that would make having access to those funds prior to your passing the smartest financial option. Life Credit’s Living Benefit Loan Program allows you to borrow against your life insurance policy’s death benefit in order to cover cancer care and other pressing financial obligations. Another option is a settlement called a viatical, life insurance can be sold to another party. There are pros and cons to viatical settlements, which each person needs to carefully consider before choosing the path that’s right for them.
What happens under a viatical settlement?
This is an option that can only be considered when someone is diagnosed with a terminal illness, typically with a life expectancy of less than two years. In this case, the person may want to access the funds to take care of end-of-life planning, such as home care or hospice. Consulting with your medical team to have them assess and document your prognosis should be one of the first steps anyone should take who is considering a viatical settlement.
Other factors to consider are the length of your policy — viatical life insurance settlements usually only apply to policies older than two years — and whether the policy was issued by a licensed and insured provider. The value of the policy is also a major consideration, and one that involves its age, the cost of the premiums and the unique health circumstances of the policyholder. What happens under a viatical settlement is that the buyer will often agree to pay less than its face value, but more than the cash value it has accumulated. Most buyers look for policies that are worth at least $1 million, though policies with less value can still be eligible.
Determining if a viatical settlement is right for you involves some tough choices, and should always include detailed research and consultation with financial professionals.