What is the difference between a viatical settlement and a life settlement?
Subsequently, one may also ask, how is a life settlement transaction similar to a viatical settlement transaction?
The third party becomes the new owner of the policy, pays the premiums, and receives the full death benefit when the insured dies. A life settlement is similar to a viatical settlement, but in a life settlement transaction, the insured is typically at least 65 years old and is not chronically or terminally ill.
Similarly, what happens under a viatical settlement? Viatical settlements allow life insurance policyholders to sell their policies to investors for an immediate cash benefit. In return, the buyer of the viatical settlement becomes the new owner of the life insurance policy, pays future premiums and collects the death benefit when the insured dies.
Consequently, what is an alternative to a life settlement?
The most common of alternatives to a life settlement is known as an Accelerated Death Benefit (ADB). An ADB, also called “Living Benefit”, allows you to receive a portion of your death benefit from your insurance company.
What is a life settlement contract?
A life settlement refers to the sale of an existing insurance policy to a third party for a one-time cash payment. After the sale, the purchaser becomes the policy's beneficiary and assumes payment of its premiums. By doing so, he or she receives the death benefit when the insured dies.