At Abacus, our goal is to become your trusted source for information about Viatical Settlements. By providing you with up-to-date knowledge, we hope to help you understand exactly what a Viatical Settlement is and if this option is right for you.
Get a step closer to learning the value of your policy today!
At Abacus, our goal is to become your trusted source for information about Viatical Settlements.
Get a step closer to learning the value of your policy today!
JUMP TO
Definition
Case Studies
Eligibility
Should I Sell?
Options
Policy Valuation
The Process
Taxation
Regulations
Getting Started
A viatical settlement is a specific type of life settlement that involves individuals who are suffering from a terminal illness. The transaction is usually made tax-free by the IRS, as long as the insured meets certain criteria stated by a medical professional.
A viatical settlement is a legal and viable option for individuals suffering from a terminal illness to sell their life insurance policy for an amount that is more than the cash surrender value but less than the claim amount.
In exchange for transferring ownership, the insured receives a cash settlement that can often be four times greater than the cash surrender value.
A viatical settlement is not a loan, it is a one-time cash transaction that results in a full transfer of ownership in exchange for a lump sum. The money belongs entirely to the policy seller and can be spent at his or her discretion. Viatical Settlements can also be in the form of a paid-up death benefit.
Selling your life insurance policy to pay for medical needs is specifically for individuals suffering from a terminal illness. The transaction can typically be done tax-free, so long as the insured meets certain criteria as stated by a medical professional.
At its core, it is essentially the same as other life settlement options; with the major caveat being the insured is typically suffering from a terminal illness and has a life expectancy of fewer than two years.
Sam, 75, of Boca Raton, Florida
Sam, who was recently diagnosed with stage 4 rectal cancer and needed funds immediately to assist with treatment. He had a term policy that had a face value of $150,000 and he was planning to surrender it so he could utilize those monthly payments towards his treatment. He discovered life settlements and reached out to Abacus.
After we reviewed his case, Abacus was able to offer her $90,000 which helped him pay for the treatment plan she wanted to pursue.
Alyssa, 79, of Houston, Texas
Alyssa had a $600,000 permanent policy and was prepared to surrender the policy for a cash value of $2,500 from the life insurance carrier.
She was able to receive $390,000 for the policy and the owner was able to use the proceeds to cover their medical costs because of Abacus.
To be eligible for a viatical settlement, the policyholder must be terminally ill or chronically ill with a life expectancy of fewer than two years.
Most types of policy types qualify for a viatical, including term life.
The average payout of a life insurance sale is 4-6 times the cash surrender value of the policy. At Abacus Life, we pay a policyholder an average of 6-8 times the cash surrender value of their life insurance policy.
Being a direct buyer, Abacus has created a streamlined process to make selling your policy fast while cutting out the middle man so we can pay you more.
For many individuals facing a terminal illness, a viatical sale can be a strong financial solution. You may be able to cover all or part of the costs involved in your medical care; including travel, stay, and your actual medical costs. Some of the most common reasons you may consider a viatical settlement include:
Depending on the terms of your policy, changes in the insurance market and poor policy performance could drive up the price of the premium payments you pay. Or you may have experienced an unexpected financial issue – like increased medical bills, legal issues, assisted living costs, or tax issues – that’s now stretching your budget.
Coping with a medical crisis while still worrying about medical bills works against the goals of palliative care and hospice. With the cost of healthcare continuing to rise, even those with excellent health insurance are struggling to keep up with medical expenses. Viatical settlements can provide an inflow of funds that can be used to pay off bills or fund experimental/alternative treatments that may not be covered under insurance
Patients and their families can receive funds to pay for medical care or quality of life experiences. We commonly see clients use their funds to tackle their “bucket-lists.” Many insured want to be able to see their family enjoy their life insurance money now, rather than not being present to share in their happiness.
If you are struggling with medical bills, having an issue keeping up with your premiums, or just want immediate income, a viatical settlement could be right for you. We at Abacus advise that anyone considering a settlement take a close look at their life insurance and financial situation to make sure they are making the correct choice for themselves and their family. If you do not have an immediate need for a lump sum of cash, we suggest not seeking a life settlement as realistically, the greatest payout you can receive is the death benefit.
Retained Benefit
The Retained Benefit option means you would no longer pay any premiums and retain a portion of your benefit.
Beneficiaries will receive a guaranteed percentage when the policy ends, but you have no further obligations or payments to make.
Traditional
The Traditional option is to sell your full life insurance policy for a cash amount above the policy’s surrender value.
You have no further obligations or claims to the policy, with all future premiums paid by the buyer.
Hybrid
The Hybrid option is a combination of two, where you would sell a portion of your life insurance policy.
With this option, you receive a cash payment now, your beneficiary receives a guaranteed percentage of the benefit when the policy ends, and you have no further obligation to pay future premiums.
Each case is specific, and there is no one-size-fits-all answer. We handle each case individually and with utmost confidentiality and sensitivity, as understanding your options will require knowledge of personal details:
To see exactly how much your policy is worth, we recommend you to get an estimate now using our calculator or contact us at 800-561-4148 to learn more.
Before making a decision to sell your policy, the policyholder and their beneficiaries must make the conscious decision to pursue this option. This means contacting your financial advisor or the Abacus team and looking into all alternatives to make sure that it is the most advantageous solution for you. There is no cost or obligation to accept an offer at any time.
There are certain specifics that determine if an individual will qualify such as premiums, the life expectancy of the insured, and the death benefit. The information disclosed will be used by an in-house medical underwriter who will calculate the insured’s life expectancy using medical records and determine how much the policy is worth at no cost to the insured.
Abacus, or the chosen buyer, would then extend an offer to the insured. The offer would be more than the price, but less than the net death benefit. The buyer must be licensed in the state in which the owner of the policy resides.
If the amount offered by the licensed buyer is acceptable to the policy seller, they can choose to accept the offer and request the required documents for review.
At this time, the licensed buyer generates state-approved contracting documents. These documents are utilized to record the life settlement transaction as well as spell out the agreement between the seller and the purchaser. Both parties must sign and notarize the contracts.
Once the contracts are executed and all the required accompanying documents have been received, the verification process begins. Often completed by a third party like a law firm, this verification agent will check that all the contracting documents have been completed properly. They may also check that the policy is in full force and in good standing with the insurance company. They will verify that the funds for the purchase have been put in an escrow account for the policy seller.
Subsequently, a request for ownership change will be sent to the insurance carrier. This ensures that the owner is changed from the current policyholder to the buyer or the financing entity that the buyer names as owner.
After the insurance carrier has confirmed that the purchaser is listed as the owner, the escrow agent is instructed to release the funds to the seller. The new owner is now responsible for all premiums going forward and the seller has received payment for the transaction.
This concludes the transaction and the insured is free to use the money at their discretion.
The transaction is usually made tax-free by the IRS, as long as the insured meets certain criteria. A medical professional, usually a doctor, confirms the terminal diagnosis.
For more information on how life insurance proceeds are taxed, visit the IRS.
Over the past decade, the market has become incredibly well regulated. The entire life settlement market is regulated on a state-by-state basis instead of nationally. Therefore, the responsibility falls on each state’s government to make sure that companies are behaving ethically. The majority of states do require specific licensing and practice strict oversight to ensure customer safety. Here at Abacus Life, we are proud to share that we are licensed for life and viatical settlements in many different states.
Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wyoming
Simple, just reach out to us via phone, e-mail, or fill out our calculator! You’ll be supplied with an initial offer within 24 hours of contacting us, assuming you qualify.
We don’t believe that you should have to wait for the industry standard 45-60 days for life-saving treatment. A Life Settlement allows you to focus on what is most important right now…healing.
