Viatical Settlement Transfers

The transfer of viatical settlement to a living will is a popular strategy for living trust owners seeking liquidity for medical treatment or end-of-life expenses. Settlement transfers the title of a life insurance policy to a new buyer in exchange for payment. An insured can avoid the risks of collateral borrowing against a limited life insurance policy with viatical settlement. Distinct from other derivative products, viatical settlement affords a life insurance policy holder access to immediate cash. Viatical settlement proceeds can be reinvested without the extenuating contract obligations. The portability of viatical settlement makes it a vital option for a living will originator seeking a convertible and transferrable investment vehicle to fund expenses later in life.

Viatical Settlement Laws

Federal and state insurance legislation permits viatical settlement of a life insurance policies. New York’s Consolidated Laws, Insurance Laws, Article 78, Life Settlements specifying rules to viatical settlement within the state were reformed in 2009 by the New York Life Settlements Act. The legislation governs viatical settlements and licensing requirements for life settlement brokers and institutional intermediaries. Estate professionals, planned giving specialists, and trustees can find out more about viatical settlement laws and provisions guiding transfer of insurance title assets to a living will, estate, trust, or nonprofit charitable giving plan.

Requirements for Settlement

Life insurance policy holders eligible for life settlement are subject to the terms and conditions of agreement. An eligible policy has the potential of providing an investor the finance offset required to cover medical treatment, and other important expenses associated with end-of-life care. The seller and buyer must assent to modification of an insurance policy’s terms and conditions prior to settlement, such as obligation to premium payments assumed at time of contract origination. In addition, the full value of the life insurance policy must be agreed to prior to settlement. Requirements for distribution to designated beneficiaries named within the conditional terms of the policy, or any other condition affecting the value of the life insurance agreement, must be specified prior to transfer.

Viatical Settlement Brokerage

Insurance brokerages working with third-party institutional investment groups negotiate vital settlement. The marketing of an existing life insurance policy by an insured, lets investors know they are interested in settlement. Brokers are guided by state insurance legislation rules. New York stator provisions under Section 7814 (5) Prohibited Practices, defines contract duty “with respect to any life settlement contract, knowingly fail to disclose any affiliation or contractual arrangement.’” A licensed attorney specializing in insurance law or insurance broker can advise a client seeking transfer of a life insurance policy asset by way of viatical settlement.

Protecting Oneself, Beneficiary Assets

The formation of a living Will enables a person to plan advance directives specifying medical informed consent procedures and end-of-life care. A living Will eliminates the stress for loved ones, protecting the wishes of a person while they are still living, as well as the estate and its assets from unforeseen expenses after a decedent is gone. Whether planning for retirement, or an estate to protect assets for future generations, viatical settlement from insurance proceeds covers the costs associated with advance directives. An effective strategy for individual investors interested in absolving heirs and beneficiaries from obligation, viatical settlement is the perfect solution to the expenses associated with a living will plan.

Viatical settlement is brokered sale of a life insurance policy to a third party, in exchange for valuable finance that can be transferred to a living will to fund future end-of-life expenses.

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