Diagnosis of a terminal illness often causes us to reflect on our lives and to rethink our priorities. Dealing with the sudden news that you or your loved one has little time remaining can be difficult to process. Being forced to face one’s mortality creates a wide range of emotions from anxiety to helplessness. At times like this, it’s important that supportive loved ones step in to help the patient manage their feelings and provide clarity regarding important decisions that need to be made. Where do you begin?
Major decisions that require financial resources include deciding whether to explore experimental treatment, or forego additional treatment and remain at home surrounded by loved ones.
Does the patient have a bucket list involving a dream vacation or mini-vacations to spend more time with family? How much money will it take to achieve any of those goals?
Making an informed decision about how you or your loved one envisions spending your remaining days may require consulting your financial advisor.
Once you have decided the direction you plan to take, you’ll want to sit down with your advisor to take an inventory of your financial assets.
If you have a life insurance policy and in need of additional cash assets to realize your goals, you may want to explore whether you qualify for a viatical settlement.
Selling your policy in the secondary market for an immediate cash payment can provide an unexpected source of funds to achieve your objectives.
The following FAQ addresses the most commonly asked questions about viatical settlements. Feel free to call a member of our team. We are available to answer your questions.
A viatical settlement is a financial transaction involving the selling of one’s life insurance policy in the secondary market for a cash payment. To qualify for the transaction, the policy owner (known as the “viator”) must be a terminally ill individual with less than two years life expectancy. The third party buyer becomes the new owner of the policy, pays the monthly premiums, and receives the full death benefit when the individual passes away. Viators often use the cash proceeds for a dream vacation, finance medical care, make charitable gifts, or to pay off debt.
The term “viatical” has its genesis in the Latin word “viaticum” which is derived from two Latin roots. The root meaning of “via” is a street or a road, and “cum” means “with” or “along with.” When combined, the literal translation is “to make a journey along with someone.”
Viatical settlements originated in the 1980s in conjunction with the onset of the AIDS epidemic in the U.S. During that time, AIDS victims faced an extremely short life expectancy. Many patients were in need of experimental treatment but the costs were out of reach for most. The market demand for viatical settlements was born out of the need for these patients to have access to financial resources to pay for medical treatment, finance their bucket list and generally to improve the quality of life during their final days. However, as medical advancements were made (the introduction of protease inhibitors) and longevity increased for those living with AIDS, viatical settlement transactions became less common. However, out of this period of time, the life settlement industry emerged.