Viatical settlements occur when the policyholder is chronically or terminally ill, and they need immediate cash. Nevertheless, you should consider this option carefully because you will receive less than the full amount in exchange for the sale and transferring the ownership rights. The individual or company that buys your policy will pay the premiums and collect the full amount at the time of death.
Accelerated Death Benefits
Numerous companies now offer accelerated death benefits to policyholders. The company will pay the benefits as a percentage of the policy's face value, but they do not include outstanding policy loans. However, this option could make you ineligible for Medicaid, and it could be taxable. Experts suggest consulting with a legal or financial adviser before entering this agreement.
Life settlements have you selling your policy to investors for a lump sum payment. Nevertheless, this costs less than the death benefit of a policy. However, you will still receive more cash from it than if you went with its surrender value. An investor usually considers your life expectancy and the terms and conditions of the policy.
In the beginning, the earliest efforts to purchase another person's life insurance policy were less than ethical. However, as time has progressed, these businesses operate more like a traditional investment. Seniors must consider differing factors before selling a policy, but in some cases, it makes more sense to sell to get out of debt or pay outstanding medical bills. In addition, if you cannot afford to pay the premiums, it makes no sense to let the policy go for nothing.
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