Second, Schedule 7 titled "List of Paid Viatical Settlements
Where Viator's Death Occurred During the Current Year," lists all policies on which the firm has collected the face value.
Since the Salazars wanted a big percentage return but were too small for the risky real estate deals, and had too little tolerance for stock funds given the bubbles and serious market reverses of the last few years, Tom recommended they invest in a privately syndicated pool of life insurance policies in a transaction called a viatical settlement
. Nita Beth and David looked it over, and thought it was a good deal--the best-case scenario showed a 40% return over fewer than five years.
Currently, 39 states and Puerto Rico regulate life settlements, and the National Association of Insurance Commissioners (NAIC) recognizes them as a viable solution (NAIC, "NAIC Adopts Viatical Settlements
Model Act Revisions," News Release (June 4, 2007), www.naic.org/Releases/2007_docs/viatical_settlements_model.htm).
(182) Iowa and West Virginia recently enacted similar legislation that prohibits a person from selling a policy within five years of its issuance, but that also requires viatical companies and brokers to disclose information to insurers if a policy is sold within five years of issuance, and classifies SPIN-Life policies as fraudulent viatical settlement
The typical benefits of a viatical settlement
to a policy owner/insured include:
A few viatical settlement
firms remain active as of early 2008, but most insureds having any history or diagnosis of HIV or AIDs are generally excluded from life settlements because of the inability to establish reliable life expectancies.
Accelerating death benefits or entering into a viatical settlement
generally is indicated only when a person is terminally ill or seriously and chronically ill, in need of cash, and other options to meet those cash needs are not available.
A viatical settlement
is the sale or assignment of any portion of the death benefit under a life insurance contract on the life of a terminally or chronically ill insured to a viatical settlement
Our patients were able to return to work and no longer had to sell their life insurance policies to third party brokers known as "viatical settlement
companies." In-patient hospitalizations diminished and the insurance companies began to pay for the combination "cocktail" therapy known as highly active antiretroviral therapy or HAART.
If you do not advise your client that there is a third option--to sell the policies through a secondary market transaction known as a "viatical settlement
," you may cause that client to suffer a substantial financial loss.
The main business of Trade Partners is buying, holding and transferring life insurance policies on persons with limited life expectancies, referred to as viatical settlement
companies purchase the discounted life insurance policies of people diagnosed as terminally ill.
While most viatical settlement
companies are legitimate, others mislead, deceive, or even defraud viatical investors.
His article, "Policing Terminal Illness Investing: How Florida Regulates Viatical Settlement
Contracts" appeared in the February 2000 Journal.
The viatical settlement
works much in the same way, except it's for those with cancer, heart disease or any other life-threatening illness.