Many people may not realize that they can sell their insurance policy to third parties while they’re alive to get money immediately for terminally ill people. A life or viatical settlement is a way for some people to get the money they need to live, but then the money isn’t available for beneficiaries, such as spouses or children.
How It Works
Primarily, you have a life insurance policy, which is meant to help pay for final expenses and give a little extra financial security to the loved ones you leave behind. However, if you have a terminal illness or otherwise need money at the end of your life, you can choose to use a viatical settlement, which allows you to see the policy to a third party and get some of the money from the policy. However, that money is then gone and cannot be used for final expenses and given to others.
Why It’s Needed
Many older adults find that they cannot live on the money they make. They may choose a viatical settlement to help pay for nursing homes and medical expenses, especially if they have a terminal illness. However, these settlements shouldn’t be used if you are likely to live more than two years and can financially hurt your family.
You do have options that allow you to keep your policy and get a loan from it. This loan gives you immediate funds without affecting your policy. Therefore, beneficiaries can still use the money in the future when you’re gone. Likewise, the loan puts no restrictions on its use so that you can use it for medical bills, regular expenses, emergency needs and whatever else you need.
Primarily, they are designed for those who have a terminal illness and need money for treatment and medication, but again, the money can be used how you see fit.