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Difference between Viatical & Life Settlement

Wednesday, May 16, 2018

There are instances when people choose to opt for life settlements; there are two main reasons behind this choice. They include, the people no longer wanting a life insurance policy, or can no longer afford the policy. This article provides answers to questions like, “what is a Viatical settlement?” and “how to select life settlement companies?”

Viatical Settlements vs. Life Settlements:

Even though Viatical and life settlements may seem to have the same features, they are slightly different. The feature that they have in common is that both of them involve selling life insurance policies.

A Viatical settlement- is done when a person wants to sell off an existing life insurance policy. This settlement is usually offered when the person insured is suffering from a terminal illness. it’s designed for people who have only two to four years of life expectancy remaining.

This kind of settlement may sound a little harsh but it’s actually quite useful because the family or kin of the insured are not left behind with expensive hospital bills once the patient has passed away. The basic idea behind a Viatical settlement is to pay the medical bills during the life expectancy period- in this case, two to four years.

A Life Settlement - This is a very common type of settlement; it involves a trade between the insurer and the customer. This settlement is for people who are healthy and can have a longer life expectancy. Life settlements are preferable because they allow the insured to obtain cash, and in return, they get to enjoy financial assistance and also have a choice of spending the funds however they want to.

The benefit of a life settlement plan is that with retirement in the near future the insured will gain more returns than if they had to give up the policy or let it lapse.

When does a Life settlement or Viatical settlement come into play?

There are several incidents that can bring a Life or Viatical settlement into play some of them include:

  • A policy is about to expire/lapse
  • The insured no longer need coverage
  • The insured doesn’t have any heirs
  • Insured is looking to settle their assets

How to choose a life settlement provider?

When you’re looking for a life settlement provider always make sure that the company is legit. This means that they have to have the proper documents and licenses to purchase life insurance policies on behalf of institutional stockholders. For a company to achieve even a single third-party life insurance policy every year, it should be a licensed life settlement provider. Occasionally, a provider also happens to be the investor.  

All good life settlement organizations make use of life settlement providers for the purpose of initiation. Life settlement agencies have experts who evaluate the investment potential for a life insurance policy and based on the data collected they make bids for the policies based on its characteristics, the insured’s life expectancy, and the interest rate.

Once the desired policy is chosen the provider resells the life insurance policy, or sells a fraction of the interest in them, but only if they have a licensed investor, then the policy is sold to other investors.

Also, Read >> How to Choose the Right Life Settlement Provider

What to keep in mind before choosing life insurance settlement?

It is important that you always consider all the choices that are offered to you and examine them thoroughly; don’t let your life insurance expire and don’t agree to surrender the value of your insurance claims that the company is willing to offer you.

Life settlement agencies will help you obtain the most cash from your insurance policy. By maximizing the value of your settlement, you will allow the unwanted policy to turn into cash that you can put towards valid expenses.


As long as you take the help of a valid and reputable life settlement company you don’t have to worry about the various procedures that go behind a life settlement. Here at Harbor Life, we deal with life settlements. Experts that are hired by us handle all the legal formalities of the sale; and ensure that you get the maximum returns from your policy while still following all the valid state rules.

By following the rules the professionals at settlement firms, make sure that you’re protected by the state’s department of insurance.

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