What is The Difference Between a Viatical  and a Life Settlement?

What is The Difference Between a Viatical and a Life Settlement?

Viatical Settlement Definition

Viatical – Refers to a life insurance policy sold for a percentage of its death benefit to provide cash to the terminally ill insured policy holder. The death benefit is usually much greater than the loan value or cash surrender value of the policy. This option provides more cash for use. There are no conditions on what the funds may be used for.

Sometimes confused with senior or life settlements. The difference being life settlements are used by those age sixty five or older to provide cash or income for retirement.

Is a Viatical Settlement a Security?

When a person who has been diagnosed with a terminal illness decides to sell his insurance policy to another company then it is called a viatical settlement. The company will buy the policy for a certain amount and they will in turn become the beneficiaries for the policy.

Viatical settlement and life settlement are both similar except that life settlement is done by a person who is perfectly healthy.

Before going in for a viatical settlement one should know how much money one will get for his policy. Most companies who choose to go for a viatical settlement will settle down for a nominal value which is closer to the policy amount. 

Benefits of Viatical Settlement

A person who has been diagnosed with terminal illness can use the money he gets from the viatical settlement for his medical treatment. The money one gets from viatical settlement can also be used for one’s daily expenses.

One can take a holiday trip with the money one gets through viatical settlement. One can use the money one gets by viatical settlement to pay for all the medical bills one has incurred for one’s treatment. One can also make use of the money one gets from this viatical settlement to stay in a nursing home and lead a happy and carefree life.

What Happens Under a Viatical Settlement?

When a person is young and healthy, he can do his own work. But as they grow old, their ability to work reduces and they are not able to perform as before. At such times an option like a retirement home is an ideal solution for them. 

In a retirement home, they can get help for all their activities and they will be taken good care of. To get in to a retirement home one needs money and the viatical settlement money will come in handy.

Though there are many advantages in opting for a viatical settlement, there are disadvantages also. Insurance policies are normally taken by a person to safeguard the family after his death. 

If one opts for viatical settlement and takes the money when one is alive, then the family is left unattended. But in situations like terminal illness, one can consult one’s family and take the decision accordingly. 

A Life Insurance Policy 

Will help one’s family to meet one’s funeral expenses after his death. But by opting for a viatical settlement, one cannot use the money for this purpose. In such case, one can keep a certain amount separate to meet the funeral expenses

By doing this they can take the burden off their family. Also if a person is young and has minor children to look after then taking a viatical settlement may not be a good option. But if the person is old and has grown up children then he can choose to have a viatical settlement. 

For a retired person who does not have any other income, viatical settlement will be an ideal solution. Any one who does not have enough medical insurance and has no family to support can choose to have viatical settlement. This will help them settle all their expenses.

Cash life Insurance Settlement

Cash life insurance settlement simply means a cash settlement that is needed so as to meet a person’s life insurance policy. This can happen for many different reasons. Most of these reasons include the likes of medical treatment, poor performance of policy, incapacity to afford premiums and so on.

LIfe Insurance Settlement Companies

Are always eager to purchase many life insurance policies from individuals. These companies also buy policies of life insurances from trusts and companies as well.

These companies later award a certain fixed percentage of the complete policy amount to the policy seller. The particular company thus eventually becomes the owner of these policies. these companies also become beneficiary of the policies that are bought.

Later after the policy owner expires or in a situation when the policy reaches its mature status the company then collects the total amount of the policy.

Thus as it can be easily understood, the difference between the total amount that the company pays to own the policy and the amount the company receives from the insurance company becomes the income to the company.

This is the income of the company on that single particular transaction involving insurance settlement. Usually the cash life insurance settlement companies presents one with higher amounts on the insurance settlements than what the insurance companies usually offer.

What is The Difference Between Insurance and life Assurance?

There are many assurances available in the market. Select ones from good and reputed companies. Get the help of assurance agents. you can check online also without the help of an agent. Life assurance will cover you till your death and your loved ones after your death.

Term life assurance will cover you for a limited period. If you find the benefits good and to your advantage, you can renew it. Term life assurance can be for funeral expenses and even for income replacement.

Many go for such policies than for life insurance. Term life assurance will be easy on your pocket as well. You can pay in easy monthly installments. You can customize term life assurance according to your requirements and can make the term very short.

However, if you do not have life assurance and term life assurance, it can prove costly. Or worse, it can place a heavy financial burden on your loved ones after your death. So be wise and go for both. Insure the future of your dear ones, it’s only when you know that their future is safe can you be at peace.