The terms “Viatical Settlement” and “Viatical” are generally synonymous with the term Life Settlement
. However, these terms do differ slightly in different states and in their origins and meaning, as described below.
The birth of the viatical settlement industry coincided with the AIDS epidemic of the late 1980s and early 1990s. During this period, AIDS was almost always a terminal illness. Many people who were diagnosed with AIDS owned life insurance policies through their employee benefit plans or in the form of policies they purchased privately through brokers and agents, before they were diagnosed. Many people with AIDS faced expensive medical costs and other financial pressures as the illness progressed. Viaticals offered them a means of turning an otherwise non-income producing asset, a life insurance policy, into lump sums of cash they could use to provide for their medical and personal needs. In fact, viaticals involving people who have terminal illnesses were eventually granted tax-free status so that if the insured person meets certain requirements, the money received from a viatical settlement transaction is not taxable.
Today, the sale of an unwanted or unneeded life insurance policy is divided into two transaction types: “viaticals,” which are now generally considered to involve only those cases in transaction which the person covered by the policy (also called the insured) has a terminal, catastrophic, chronic or life-threatening illness or condition, and “life settlements,” which involve the sale of life insurance policies covering the life of someone over the age of 65 who may not necessarily be suffering from a terminal or chronic illness or condition. Other terms used to describe life settlements are: senior settlements and senior life settlements. Technically speaking, the term viatical settlement (or viatical) can be applied to either type of life insurance settlement. Regardless of the terminology used, the processes involved in completing either type of life insurance settlement are essentially the same.
Many states regulate viaticals and life settlements, and as the industry matures, more states are adopting regulations. In some states, viatical settlements are regulated and life settlements are not, but gradually legislation regulating both types of life settlement transactions is being enacted across the country.
For definitions of the terms listed below, as well as other terms related to viatical settlements, please refer to our glossary page.
viatical life settlement
viatical life settlement company
viatical senior settlements
viatical life settlement provider
viatical life settlement broker
life insurance viatical