What Does Viatical Settlement Company Mean?
A viatical settlement company specializes in viatical settlements, or investments wherein the settlement company buys a life insurance policy from an insured person. The seller receives an upfront cash payment for their life insurance policy, while the viatical settlement company gets ownership of the insurance policy. When the insured dies, the viatical settlement company receives the death benefit.
A viatical settlement company is also known as a viatical settlement provider.
Insuranceopedia Explains Viatical Settlement Company
Viatical settelement companies make money because they pay less than the death benefit on a life insurance policy. They usually pay up to 75 percent of the policy death benefit. Their return is the extra money they make when the insured dies. This can be a little risky because their return depends on how long the insured lives. If the insured lives much longer than expected, the viatical settlement company's return will be low.
As a result, viatical settlement companies often only work with people who are terminally ill. This way the company can better predict its earnings and avoid surprises.