Both options let you access cash from your life insurance during a serious illness. But they work very differently — and the right choice depends on what matters most to you and your family.
You sell your life insurance policy to a third-party investor. The buyer pays you a lump sum (typically 50-80% of the death benefit), takes over premium payments, and collects the full death benefit when you pass away.
Your beneficiaries receive nothing from the policy. The transaction is permanent and irreversible. The process typically takes 2 to 4 months.
You borrow against your death benefit without selling the policy. You receive a lump sum (up to 50% of the death benefit), and the loan is repaid from the death benefit when you pass. Your beneficiaries receive the remaining balance.
You keep ownership of your policy. There are no monthly payments, no credit checks, and no income requirements. Funding can happen in as few as 3 days.
Every factor that matters when choosing between these two options.
| Factor | Viatical Settlement | Living Benefit Loan |
|---|---|---|
| Transaction Type | Sale of policy | Loan against policy |
| Policy Ownership | Transferred to buyer | You keep it ✓ |
| Death Benefit for Beneficiaries | None — goes to investor | Remaining balance preserved ✓ |
| Typical Payout | 50-80% of death benefit | Up to 50% of death benefit |
| Speed to Cash | 2-4 months | As fast as 3 days ✓ |
| Tax Treatment | Tax-free for terminally ill (IRC 101(g)) | Loan proceeds — not income |
| Monthly Payments | None (policy is sold) | None — repaid at death ✓ |
| Credit Check | No | No |
| Income Requirements | No | No |
| Use of Funds Restricted? | No restrictions | No restrictions |
| Reversible? | No — permanent sale | Policy stays yours ✓ |
| Third-Party Ownership | Investor owns your policy | No third-party ownership ✓ |
| Minimum Policy Size | Varies ($100K+) | $75,000+ |
Find out how much you can access — no obligation, no credit check.
Do I have people depending on my death benefit?
If yes, a Living Benefit Loan preserves their inheritance. A viatical settlement eliminates it entirely.
How urgently do I need the money?
If your bills are due now, a Living Benefit Loan can fund in days. Viatical settlements take months.
How much cash do I actually need?
If up to 50% of your death benefit covers your needs, a loan may be the better path. If you need 60-80%, a viatical settlement provides more upfront.
Am I comfortable with an irreversible decision?
A viatical settlement is permanent. If there's any chance you'll want your policy back, a loan keeps that door open.
What are my tax considerations?
Viatical settlements for the terminally ill are generally tax-free (IRC 101(g)). Living Benefit Loan proceeds are not taxable income since they're loans. Consult a tax professional for your specific situation.
Life Credit has been providing Living Benefit Loans since 2012. We've delivered over $175 million to cancer patients, individuals with ALS, heart failure, Alzheimer's, and other serious conditions. We're rated 4.9 out of 5 on Trustpilot with over 223 reviews.
We don't pressure you into a decision. We believe people deserve to understand all their options — including options that aren't our product. That's why we created this comparison page. If a viatical settlement is genuinely better for your situation, we'll tell you.
But if keeping your policy matters to you, we want you to know there's a way to access cash without giving it up. That's what a Living Benefit Loan is for.
Find out how much cash you can access from your life insurance — no obligation, no credit check, funding in as few as 3 days.
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