A lot of people confuse viatical settlement and life settlement with each other and use them interchangeably. However, both have two different purposes. Shedding light on what viatical settlement is, it’s the kind of settlement you get in exchange for your policies when your life expectancy is less than 2 years. People would go for a viatical settlement when they are terminally ill.
While a person who is terminally ill goes for a viatical settlement, a person who has a life expectancy above 2 years would choose a life settlement. That being the difference, the viatical settlement has its own perks for the person who wants cash in exchange for his/her policy. Here’s a list of 5 benefits of a viatical settlement.
Rapid Source of Money
For anyone who is suffering from an illness and has a short life expectancy, viatical settlement can prove to be a blessing. As such, life insurance policies seem like an asset that can’t be liquidated. However, a viatical settlement helps you turn this asset into instant cash for whatever reason. When you meet the criteria and qualify for a viatical settlement, you get about half the amount of the death benefit. And the best thing about a viatical settlement is getting all the money in return for your policy in one go.
At a stage when a person is suffering from a terminal illness and has less life expectancy, paying premiums might seem out of question. Even while paying premiums; it might feel more like a burden or even a hard blow to the pocket. That’s the time when the person has to already take care of so many other things. When, as a person suffering from a terminal illness, you find premium payment being a burden, you can get a viatical settlement. Even if you only cash out half the actual amount, you wouldn’t have to take care of the premium payments further.
No Tax Liability
Viatical settlements are one of those settlements that don’t have a tax liability; given the person seeking a viatical settlement is suffering from a terminal illness. Anyone with a life expectancy of 2 years or less would come under this category and wouldn’t have to pay taxes. With such regulations, a person who gets money in exchange for his/her life insurance policy would be able to cash out all of what he receives tax-free. In fact, most people choose a viatical settlement for this reason. However, the policyholder should be an individual and not a business.
It is but obvious that a person who is terminally ill would have to undergo constant treatment and as a result would incur hefty medical expenses. No matter what his or her life expectancy would be, the fight lasts till the last breath. This is where a viatical settlement can come to the rescue of this person. The money that you receive as a viator can help you pay the costs of medications and frequent treatments that you need to undergo. So many patients don’t have the needed amount of money to deal with medical expenses. This is when the life insurance makes more sense for the treatment of the patient rather than being passed on to the beneficiary.
On an emotional level, a person who discovers having a terminal illness goes through a state of emotional crisis. The emotional status of that person progresses through different stages. And there’s one stage where the realization of having less amount of time left hits the person. This is when he or she might want to invest in self-care and living a life of quality and completeness for however long it’s possible. A viatical settlement would help this person lead a life of satisfaction. Even as a loved one, you can suggest viatical settlement to that person so that the person can lead a normal life for the time he/she has in hand.
When you plan to get a viatical settlement, you should look for the best of viatical settlement companies. And when you select a company and approach them, your policy and health status would be studied and you would be offered money based on certain factors. After all the analysis and framing of the offer, it’s up to you if you find the offer to be a fair deal or not.