A viatical settlement is the sale of a life insurance policy, in exchange for immediate cash payout. This payout is almost always above the cash surrender value but below the death benefit amount. To qualify for a viatical settlement, the insured on the policy is terminally ill with a life expectancy of under 2 years. This is opposed to a "Life Settlement", which is the sale of a senior’s life insurance policy who is not terminally ill.
Your life insurance is an asset - and the insured can sell it just like your house or your car. When you sell your policy, you're given an upfront cash offer. This "viatical settlement" generally can be anywhere from 30% or 70% of the value of the insured’s life insurance death benefit - however, the settlement offer will differ widely from policy to policy.
As viatical settlements are meant for people with some sort of critical illness (such as cancer), it can be a smart option to keep your finances in order. Cancer treatment costs can often skyrocket, so if you would prefer to sell your life insurance policy, it is a valuable option.
With treatments as expensive as they are, you can use your life insurance to fund the treatments. It's important to not lapse or surrender your policy before checking if you qualify for this option. If you qualify, Ovid can help you get the fair market value for your life insurance policy.
A viatical settlement can take 4 to 6 weeks from beginning to end. There are several steps in the process. Ovid will match insureds with regulated Viatical settlement providers. These are licensed companies which specialize in purchasing people’s life insurance policies. The insured can use our calculator to help figure out if you qualify, and if so, match the insured with licensed providers.
Once the insured is in contact with a provider, they will inquire about both their policy and their health. While confidential information, their health is an important part of the transaction, so there is then a diligence period where the provider will order and review copies of your medical records.
Once the diligence is complete, the provider will hopefully make you an offer for your policy. If you like the provider and agree on the offer price, the next step is to transfer ownership of the life insurance policy. This is something the provider can help take care of. In the meantime, the settlement offer will be escrowed so that you see the funds. The conditions for release of funds are a successful transfer of policy ownership.
Ovid matches you with licensed buyers to purchase your policy. It is free to get an offer from one of these licensed providers. We work with large institutional providers to make viatical settlements accessible to consumers. You can learn more about the process here.
While we have changed the name for confidentiality, this was a real case. Mary Ann realized that her cost of cancer treatments was becoming very expensive and she was struggling to pay for it. She also had an old Universal Life policy that her kids no longer needed - as they were grown up and financially stable on their own. Mary Ann learned about viatical settlements and used Ovid to get matched with several licensed buyers.
So to summarize, she (1) Did not need the policy, (2) Could not afford the policy, and (3) Needed extra liquidity. These are great circumstances under which to investigate a settlement option.
She worked with the licensed providers and received $230,000 in cash - enough to pay for her treatments and improve the quality of her retirement. This option has helped many people like Mary Ann.
The insured will get paid when the policy ownership and beneficiary is transferred to the buyer.
Once the ownership of the policy is transferred, the insured is no longer responsible for paying premiums. The licensed provider will continue to make premium payments directly to the insurance company.
When an insured sells their policy, it then belongs to the licensed provider who purchased it. This means that when the insured passes away, their beneficiaries will not collect the death benefit from that policy - the investor will.
If you are interested in the option, ask if any of the following are true:
The insured is going through medical challenges that are expensive to cover. Maybe they would even lapse the policy because it's getting too expensive to pay both the medical costs and the premiums. Many people turn to this solution to cover their cost of medical expenses.
Extra funds provides for a better retirement. Life is short and it only happens once, so if you want to live well... a viatical can fund a retirement lifestyle that you've always wanted.
Are the children all grown up and financially independent? Do they still need the parent to continue to provide the safety net of your life insurance? Has the spouse passed on before the insured?
In addition, we can also provide viatical settlements services for business-related life insurance policies such as key-man policies.
In 1911, the U.S. Supreme Court declared that life insurance is a person’s personal property, and that the policy owner can assign its ownership at their own discretion. This unlocked another option for people in need of funding to cover medical expenses - as an alternative to surrendering their life insurance. Insurance is regulated on a state basis, so depending on the state the policy owner lives in, there may be different laws surrounding the transaction. Viatical settlements are a heavily regulated industry overseen by the state insurance commissioner.
Offers can range from 30% to 70% of the death benefit in cash. It is totally dependent on your health, the cost of the insurance and the buyer's cost of capital. Each situation is unique.
The entire sale process can take approximately 3 to 8 weeks. Most of this time is collecting medical information and transferring the ownership of the policy with your life insurance company.
Ovid makes viatical settlements accessible to consumers by matching qualified candidates with licensed buyers.
Your offer is mainly dictated by your age, health, life insurance premium costs, and policy value.