Viatical Settlement Price Quotes

Tips and Information about Viatical Settlements

 

A viatical settlement is the sale of a life insurance policy by the policy owner, before the policy matures. Such a sale, at a price discounted from the face amount of the policy but usually in excess of the premiums paid or current cash surrender value, provides the seller an immediate cash settlement. Generally, viatical settlements involve insured individuals with a life expectancy of less than two years. In countries without state-subsidized healthcare and high healthcare costs (e.g. United States), this is a practical way to pay extremely high health insurance premiums that severely ill people face. Some people are also familiar with life settlements, which are similar transactions but involve insureds with longer life expectancies (two to fifteen years).

A viatical settlement can be an innovative wealth and estate planning tool under the right circumstances. It also essentially creates an open market for redemption of a policy. For example, if the only place you could sell your Ford Motor Company stock was to Ford you would not get that much for it. The same applies to the value of an insurance policy. As long as life insurance has been around, the only place to redeem your policy was from the issuer. Now, much to the chagrin of the life insurance industry, there is an open market to determine a policy's value.

From the perspective of the investor, purchasing a viatical settlement is similar to buying a bond with a negative coupon and an uncertain redemption date. The return depends on the seller's life expectancy and when he or she dies.

Viatical settlements grew in popularity in the United States in the late 1980s, when the AIDS epidemic first hit. The early victims of AIDS in the U.S. were largely gay men, many of whom were not particularly old. They often had no wives or children (the traditional dependents in a life insurance policy), but they had life insurance policies through employment or due to other investment activity. The dependents on the policies were often their parents who did not need the money. Viatical settlements offered a way to extract value from the policy while the policyholder was still alive.

At the time, the AIDS mortality rate was very high, and life expectancy after diagnosis was typically short. Investors were reasonably sure that they would collect in a relatively short time. This combination of events caused a surge in viatical settlements as both investors and viators saw an opportunity for mutual benefit.

Viatical settlements eventually developed a bad reputation in the investing community. The companies that purchased them from policy holders typically resold them to individual investors. Salesmen were paid large commissions to push the settlements, which were not conventional investments and which were misunderstood by many investors. The government regulatory agencies had little experience and few regulations dealing with viatical settlements, and the industry attracted some unscrupulous dealers.

Despite the bad experience of some investors, viatical settlements remain an often valuable tool for the personal financial management of many ill people. A 2002 study showed that among hospice financial counselors who have had experience with viatical settlements, most report positive experiences.

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The Life Insurance Settlement Industry exists because it provides a unique financial service to policyholders in need. Simply put, Life Insurance Settlements allow policyholders to use their life insurance policy as a liquid financial asset. It involves the sale or transference of an existing life insurance policy in exchange for compensation, monetary or otherwise. It is an invaluable service for those in need of financial assistance or a timely alternative for senior individuals re-evaluating their estate planning.

The amount provided in a Life Insurance Settlement reflects the discounted future value of your life insurance proceeds. There are several important factors in the computation of a present value amount. These factors include the expected amount of time for collecting the life insurance proceeds as reflected in the insured's life expectancy estimate, the annual cost of maintaining premium payments and a discount rate.

A practical discussion on Life Insurance Settlements

Because of State regulations protecting policyholders, the Life Insurance Settlement Industry is divided according to the age and the health condition of the insured. A Viatical Settlement is provided for terminally ill individuals with a life expectancy of five years or less. A Senior Settlement (also referred to as a Life Settlement) is designed for individuals age 65 and above who have a shortened life expectancy but are not terminal.

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When the stock market is volatile it is a prime time for investment fraud. Con artists lurk everywhere trying to get rich from unsuspecting investors who are looking for ways to recoup their lost savings. They pitch their scams on ways to beat the system and get high returns with virtually no risk, making those who choose to listen believers of their 'too good to be true' claims. Those who have lost their retirement savings or who are trying to build a nest egg could fall victim to these scams unless they use common sense and extreme caution.

To avoid scams, investors should proceed slowly and cautiously before committing to any investment scheme. Check with state regulators to be sure an opportunity is legitimate. Use common sense when hear of a deal that is too good to be true.

Scams come by way of telephone, internet, mail, in-person, and email.

These crooks are experts in their field who make their living by talking people out of their money. This is their chosen career and they take pleasure in swindling anyone who will be swindled. The telephone and internet makes it very easy for these persons to operate. A well honed telephone message can wear down some of the most difficult marks. A well built web page can make the most dishonest business appear legitimate.

The North American Securities Administrators Association lists the top 10 investment frauds:

1. Unlicensed individuals selling securities
2. Deceptive stockbrokers
3. Analyst research
4. Corporate promissory notes
5. Debt notes from prime banks
6. Illegal viatical settlements
7. Affinity fraud
8. Charitable gift annuities
9. Oil and gas schemes
10. Leasing scams

Some ways investment fraud is carried out are:

1. Internet fraud
2. Abusive sales pitches
3. Fraudulant investment seminars
4. Telemarketing fraud
5. Pyramid schemes
6. Commodity fraud
7. Illegal franchises
8. Fraudulent high tech investments
9. Entertainment-related investments
10. Churning
11. Unauthorized trades
12. High pressure selling
13. Illegal accounts

As you can see, investment fraud can come in many different forms. You, the investor, must take responsibility for your choices. You need to be educated in protecting your hard earned money. You need to be aware that there are those who want your money and will try any scheme to get it. You need practice diligence in choosing your broker, financial advisor, insurance representative, or any other person who will make choices for you and your money.

• Got questions about investment fraud?

• Got a story to tell about investment fraud?

• Got suggestions on more ways to avoid investment fraud?

For more information about Viatical & Life Settlements please visit http://www.lisassociation.org

 

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