A viatical settlement is the sale of a life insurance policy by a terminally ill policyholder to a third party for a lump sum that is less than the death benefit. The buyer pays the premiums and receives the death benefit when the insured dies. Viatical settlements provide immediate cash for terminally ill policyholders.
Key Points
- Viatical settlement: sale of life insurance policy by terminally ill policyholder
- Buyer pays premiums and receives death benefit
- Provides immediate cash for terminally ill policyholders
- Proceeds may be tax-free if the insured has a terminal illness
- An independent agent can help you understand viatical settlement options