Which settlement option is associated with the sale of a life insurance policy by a sick individual?
Buying An Interest In A Life Insurance Policy: Understanding The Risks And The Potential For Fraud In Viatical SettlementsViatical Settlement Show
InvestmentsIndividuals with life-threatening illnesses may be able to sell their life insurance policies for a percentage of the death benefit of the policy. If you’re interested in buying or investing in one of these policies, you should carefully consider the benefits and risks involved. Becoming a participant through an investment in a viatical settlement may or may not be the right choice for you. The information that follows is intended to inform you about viaticalsettlements from the standpoint of a participant in the purchase of a viatical settlement contract. Viatical settlement investments have been used as a device to defraud investors. States have recently passed legislation prohibiting viaticals from using advertising, which exaggerates the safety and profitability of viatical investments, after receiving complaints that companies were misrepresenting the real time required to obtain payments. States have also brought actions against unethical viatical companies. Instances of viatical settlement sales involving "wet ink" and "clean sheeting" schemes have occurred. A wet ink scheme involves the solicitation of healthy people to apply for insurance by viatical sellers. Once the policy is issued it is immediately sold to investors using misleading medical information. Clean sheeting involves the viatical seller soliciting people that actually are terminally ill to apply for insurance, either in amounts just below the limits for a medical exam, or by using the medical records of a healthy person. Clean sheeting attempts to defraud the insurance company, which may deny payment on the policy. Connecticut has acted to regulate viatical settlements under Connecticut General Statutes, Section 38a-465, et.seq. Viatical settlement providers and brokers must be licensed and the Insurance Commissioner must approve the contracts and forms used. The Connecticut Insurance Department, along with the National Association of Insurance Commissioners, is concerned that consumers may not fully understand viatical settlements. The following information is provided as general information. Consumers are urged to contact the Connecticut Insurance Department for more specific information. Terms A viatical settlement is the sale of a life insurance policy to a third party. The owner (viator) of the life insurance policy sells the policy for a reduced amount or a percentage of the contracted death benefit. The buyer or viatical settlement provider, becomes the new owner and/or beneficiary of the life insurance policy, pays all future premiums, and collects the death benefit of the policy when the insured dies. A participant in a viatical settlement invests in the viatical settlement contract obtained by the viatical settlement provider. A viatical settlement provider is the person or company that buys the life insurance policy from the viator. A viatical settlement contract is the contract or agreement in which the viatical settlement provider agrees to buy all or part of a life insurance policy. A participant is an investor in the financing transaction in which financing is obtained for the purchase, acquisition, transfer or assignment of viatical settlement contacts. Know Your Options If you’re thinking of participating in a viatical settlement you should: Important Considerations
This information is provided in cooperation with the: National Association of Insurance Commissioners What type of settlement allows a person with life threatening illness to sell his or her life insurance policy before death and receive a percentage of its face value?Viatical Settlements
People living with a terminal illness often face very tough financial choices. Selling an insurance policy through a viatical settlement is one option that may be used to provide cash to help with current medical and living expenses.
What is a life insurance settlement option?Definition: Under a settlement option, the maturity amount entitled to a life insurance policyholder is paid in structured periodic installments (up to a certain stipulated period of time post maturity) instead of a 'lump-sum' payout. Such a payout needs to be intimated to the insurer in advance by the insured.
What is a qualified viatical settlement?A viatical settlement is a type of life settlement reserved for those diagnosed with a chronic or terminal illness. A viatical occurs if someone who bought a policy from a life insurance company, and sells it after falling chronically ill.
When a terminally ill insured sells their life insurance policy to a third party the transaction is called?A life settlement refers to the sale of an existing insurance policy to a third party for a one-time cash payment. The policy's purchaser becomes its beneficiary and assumes payment of its premiums, and receives the death benefit when the insured dies.
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