What is a viatical settlement?

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What is a viatical settlement?

Diagnosis with a terminal illness sends reverberations far and wide through an individual’s life. Often, such shocking news is accompanied by uneasy thoughts regarding financial stability. A viatical settlement may provide an opportunity to alleviate those concerns in order to focus one’s time on truly important, quality of life issues like family, faith and near term health.

Simply put, a viatical settlement is the sale of an individual’s life insurance policy to a third party at a price higher than the cash surrender value of the policy. In this sense, it is similar to the more common life insurance settlement, but there are potentially positive tax implications that separate a viatical settlement from a life insurance settlements. These benefits are triggered when an individual is diagnosed with a terminal illness and expected to live for two years or less.


In 1911, the same year Ronald Reagan, Tennessee Williams, and Roy Rogers were born, the first viatical settlement was agreed upon and in the century since thousands have taken advantage of this opportunity to receive a lump sum payout for their life insurance policy.



Reasons for choosing to sell a life insurance policy are varied, but many fall under a few key categories and/or correlate with specific life events.


End of life care

The cost of care at the end of one’s life can be sizable, and for many, it represents a burden on loved ones that is undesirable.  A lump sum payout can be used to cover expenses, ensuring peace of mind.


No heirs

Any number of life circumstances can leave individuals at the end of their lives with no heirs.  A viatical settlement may allow them to better manage their legacy and make gifts that expressly align with their goals and intentions.


Relieve the burden of monthly premiums

A viatical settlement eliminates the need to continue to pay monthly premiums (which can be a financial as well as an organizational challenge during this time).  Completing the life insurance process in this way allows for a more managed approach.


Fund memories

A viatical settlement provides you with the opportunity to build fond memories with your loved ones. Take the entire family to Disney World. Take your children to see the country of their ancestors.  Free yourself to enjoy the time you have – go out and live life!



The Health Insurance Portability and Accountability Act (HIPAA) of 1996 made payments from Viatical Statements income tax-free for terminally ill individuals.  This piece of legislation was welcomed news and has led to an increase in interest in these types of financial transactions.  Your specific eligibility should be discussed with a professional advisor, like the ones at Beco Life.



We understand discussing viatical settlements is not easy, but at Beco Life we approach these discussions with honest compassion and a desire to help our clients maximize the time they have to spread joy and build memories with family.  Call us at Beco Life at (443) 379-0190 or email hello@becolife.com.

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