Viatical Insurance Polices is Capitalism at is Best/Worst

The option of viatical life settlement can make a huge difference for families who face large financial obstacles. However, as with all business transactions, there are many pros and cons associated with these agreements. A viatical settlement is one where a person sells his or her life insurance policy before its maturation. This preemptive sale results in receiving a lump sum payment after the insurer has deducted charges and processing fees. This type of sale is beneficial for the seller as he or she is able to receive money quickly rather than waiting for the annuity to mature. A buyer also likes the surety of receiving a set payment once the annuity is matured. There are, however, certain factors that need to be taken care of while dealing in this trade.

A viatical settlement can be sold by any annuity holder, irrespective of age, financial condition, or health problems. Most people sell out of financial reasons as they have to pay for mortgage, medical bills, and other expenditures. They find it better to sell this settlement to receive money that could finance their needs. It is a common observance that people in the latter stages of a serious disease try to sell their plans and spend the money on their treatment. These types of sales spiked in the 1980s but the trend has waned in recent years. Nevertheless a sizable number of people still follow it out of necessity. (Sutherland, pp. 74)

An insurance company, however, does take a little longer to process these deals as it prefers to extract the maximum benefit. There are some charges embedded into a viatical settlement and they want to pass that on to the seller. It is therefore necessary to stay vigilant while discussing sales with an insurance company. Processing usually takes a month in case of a normal life insurance plan though it may take longer in some cases. Factors that could delay processing include history of defaults on discount rate payments, technical snags, and violations of rules and regulations on part of the customer. A competent accountant can help you proceed with the sale. He or she will also make sure that you receive the maximum amount of money. (Halechko, pp. 135)

Selling a viatical settlement brings around 90% of the total value after deductions are made. No income tax is deducted on these settlements and it is ...