If you're looking into potentially selling your life insurance policy, you may have heard the term, viatical. To define viatical, it is the same type of concept as a life settlement, but has a slightly more specific definition. And if you're just getting started, a life settlement is the sale of a life insurance policy to a 3rd party in exchange for a lump sum of cash valued greater than the cash surrender value of your policy and less than the death benefit. The 3rd party continues making your premium payments until they collect the death benefit upon maturity of the policy.
The viatical settlement definition refers to the sale of a life insurance policy when the owner is terminally ill, and is given around 2 years or less to live. Some life insurance policies have an accelerated death benefit rider, but it isn't typically available until someone has less than 12 months to live, and you may need money sooner to help pay medical bills and/or enjoy your last months and years as much as you can. Depending on your policy and situation, you should look into whether or not you have the accelerated death benefit rider and if you can get access to it with timing that works for you.
Viatical is somewhat of an older term as the early life settlements were typically done for terminally ill individuals, and nowadays it is still used primarily for terminal cases; it may affect how your settlement is taxed. We're not CPA's or tax attorneys, but in our license training it mentions that viaticals are non-taxable. If your case is not a viatical, the IRS uses your cost of insurance paid to date as your tax basis, and anything you make in profit over that amount can be considered income. In other words if you've paid $100k in insurance costs over the life of the policy (this does not include any cash value currently in the policy) and you're getting a settlement for $90k, you're not technically profiting from it. It's important to consult a tax advisor to determine if your potential settlement is subject to any income taxes. With that said, many CPAs are actually unfamiliar with the latest tax laws for life settlements, so as brokers we do our best to point them in the right direction when needed.
The best way to get started would be to speak with our team to see if your case qualifies for a viatical settlement or life settlement, and that determination really comes down to the underwriting. If you do qualify, then we'll begin the process of appraising, preparing, and presenting your case to as many investors as we can, and present you with the highest bidder with no obligation to settle. As life settlement brokers, our job is to represent the policy owner, also referred to as the seller, so we have your best interest throughout the process.
To get started, fill out the free appraisal form on this page with your basic details, and we'll get back to you promptly with an approximate range of where we think offers are likely to come in.