Life Settlements and Viatical Settlements: A Simple Guide for Seniors
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What Is a Life Settlement?
A life settlement is the sale or transfer of an in‑force life insurance policy when the insured is typically age 65+ and not facing a terminal illness.
You receive a lump‑sum cash payment that is generally more than the policy’s cash surrender value but less than the death benefit.
The buyer (a licensed life settlement provider) becomes the policy owner/beneficiary and pays all future premiums. When the insured passes, the buyer receives the death benefit.
What Is a Viatical Settlement?
A viatical settlement is similar to a life settlement, but it is for insured individuals who have a terminal or life‑threatening illness (as defined by state law and policy terms).
Viaticals may have different tax treatment and eligibility rules. Consult a licensed professional.
Who Typically Qualifies?
Age: Often 65 or older for life settlements; any age for viaticals depending on medical condition.
Policy types: Universal life, whole life, and some convertible term policies.
Policy size: Commonly $100,000+ in face amount.
Health status: Life settlements often involve seniors with health changes that could shorten life expectancy. Viaticals require qualifying terminal or chronic illness.
Policy status: Policy must be in force, with verifiable ownership and beneficiary rights.
What Could You Receive?
Cash offers vary based on age, health, policy type, premium costs, and death benefit.
Many seniors receive significantly more than their policy’s cash surrender value.
There is no obligation to accept an offer; you can compare multiple bids.
How It Works (Step-by-Step)
Quick assessment
Share basic policy details (type, face amount, premiums) and general health information.
Eligibility review
A licensed provider evaluates if your policy qualifies for a life settlement or viatical settlement.
Formal valuation
The provider estimates your policy’s market value and requests documentation.
Receive offers
Review written offers with terms, net cash to you, and any fees disclosed.
Choose and sign
If you accept, you sign transfer forms; the provider funds the purchase into escrow.
Transfer and payment
Ownership is transferred; you receive the lump‑sum payment. The provider takes over future premiums.
Benefits and Considerations
Pros
Immediate cash for care at home, medical bills, or other needs
No more premium payments
Often higher payout than surrendering the policy
Cons
Your beneficiaries will no longer receive the death benefit
Potential tax implications (varies by state and situation)
Personal information is shared during underwriting
Call now(800) 989-8137 or click “Find Care Near Me” to get matched with options today.
Costs, Taxes, and Privacy
Fees: Reputable providers disclose all fees in writing. Ask for a net‑to‑you amount.
Taxes: Proceeds may be taxable. Viaticals may be treated differently; consult a tax advisor.
Privacy: Providers follow HIPAA and state privacy rules. You can authorize exactly what medical information is shared.
Alternatives to Consider
Keep the policy and continue premiums
Accelerated death benefit rider (if available)
Policy loan or partial surrender
Reduce face amount to lower premiums
Medicaid planning and other public benefits (speak with an elder law attorney)
Frequently Asked Questions
Will I owe taxes on a life settlement?
It depends on your cost basis and state/federal rules. Speak with a tax professional before you decide.
Do I need a medical exam?
Often no. Providers typically use medical records and underwriting estimates. Requirements vary.
How long does it take?
Many cases close in 4–8 weeks, depending on documentation and policy complexity.
Can I change my mind?
Many states provide a rescission period (for example, 15 days) after funding. Check your state’s rules and your contract.
Is a viatical settlement the same as a life settlement?
They are similar, but viaticals are for those with qualifying terminal or life‑threatening conditions and may have different tax treatment.
