What is a Viator in insurance?

‘Viator’ means the owner of a life insurance policy insuring the life of a person who has a catastrophic or life threatening illness or condition, who enters into an agreement under which the viatical settlement company will pay compensation or anything of value, which compensation or value is less than the expected …

How does a viatical settlement work?

A viatical settlement allows you to invest in another person’s life insurance policy. With a viatical settlement, you purchase the policy (or part of it) at a price that is less than the death benefit of the policy. When the seller dies, you collect the death benefit.

What is the viatical industry?

The industry uses life settlement as the formal terminology. Technically, a viatical is a life settlement where the insured has less than two year life expectancy. The third party becomes the new owner of the policy, pays the monthly premiums, and receives the full benefit of the policy when the insured dies.

Why are Viaticals a bad investment?

One downside of viaticals is that they’re set up to have you rooting for speedy deaths and against medical breakthroughs. Also, there have been many instances of fraud with viaticals.

Is it legal to buy someone’s life insurance policy?

In short, it’s against the law. It’s illegal for an insurance company to sell life insurance to someone without the presence of insurable interest. Insurable interest exists when you would suffer financially from the death of the insured person.

Are Viaticals a good investment?

Viatical settlements are attractive as investments because they offer high returns and low risk. They also funnel cash to ill policyholders who desperately need it, while providing investors with a guaranteed payout.

What is the difference between a viatical settlement and a life settlement?

A viatical settlement is the sale of an existing life insurance policy at a discount form its value for cash. Life settlements are designed for those with longer life expectancies. Life settlements are fantastic as they allow the policyholder to obtain cash for an unwanted or unaffordable life insurance policy.

When can viatical settlements be issued?

Life settlements are typically given to those who are expected to live more than two to four years or whose diagnosis is debilitating but not terminal, and viatical settlements are given to those expected to live less than two to four years.

Are viatical settlements legal?

Myth #4: Viatical settlements are tax free. In 1996, the Health Insurance Portability and Accountability Act (HIPAA) was signed into law, making viatical settlements and accelerated death benefits income tax free for chronically ill and terminally ill insureds.

What is the difference between a life settlement and a viatical?

What kind of company is a viatical settlement company?

A viatical settlement company specializes in viatical settlements, or investments wherein the settlement company buys a life insurance policy from an insured person.

Which is the best definition of the word viatical?

[vahy-at-i-kuh l, vee‐] adjective. of or relating to a viaticum. of or relating to a financial transaction in which a company buys life insurance policies from the terminally ill at less than their face value and may sell the policies to investors: viatical settlements.

Do you need life insurance for a viatical settlement?

A life settlement requires a permanent policy, such as whole life insurance policy, variable life insurance or universal life insurance (or a convertible term policy). A viatical settlement does not have this requirement. Viatical settlements and life settlements are taxed differently.

What was the Supreme Court decision on viatical settlement?

The Supreme Court’s decision set forth the fundamental principle upon which the viatical settlement and later, the life settlement industry were based: a life insurance policy is private property, which can be assigned at the will of the owner. Viatical settlements were rare for almost eight decades until the onset of the AIDS epidemic.