Viatical Settlement Provider
What Does Viatical Settlement Provider Mean?
A viatical settlement provider is a party that offers something of value to a person with a life insurance policy in exchange for the rights to the death benefits of that policy. Typically, the life insurance policyholder receives a lump sum of cash in exchange for transferring those rights to the provider.
Insuranceopedia Explains Viatical Settlement Provider
People typically enter into viatical settlements with viatical settlement providers when they have an urgent need for money. This could be due to a serious illness, financial distress, such as losing their home, or other extreme circumstances. Anyone with a long-term diagnosis should look at what coverage options are available before selling, since some life insurance for chronic illnesses policies pay benefits while the insured is still living, which can solve the same cash-flow problem without giving up the policy. Generally, the viatical settlement provider offers a sum of money that is less than the death benefit of the life insurance policy. In return, when the original policyholder passes away, the provider profits from the difference between the death benefit and the settlement amount, plus any premiums paid on the policy. The premium figure matters in that math, since a policy that’s expensive to keep up reduces what a provider will offer, and checking the average cost of life insurance can show whether your premium sits on the high or low end of normal.
