A viatical settlement is a transaction where the owner of an individual
life insurance policy or the certificate holder under a group insurance policy
sells his/her ownership rights in the policy to a viatical settlement company.
When this occurs, the owner of the policy or certificate being viaticated
becomes a viator. The owner of a life insurance policy insuring an individual
who is terminally or chronically ill may choose to viaticate the policy in order
to access a cash settlement to pay for the insured’s living and medical
expenses. These transactions are not limited only to individuals with a
chronic or life-threatening disease, however. When life insurance on a
healthy insured is viaticated, the transaction is generally referred to as a life
The viatical settlement company pays the viator a percentage of the
face value of the policy or certificate being viaticated, and then continues
to pay the premiums on the policy. In return, the viatical settlement
company becomes the sole beneficiary of the life insurance policy, and
upon the death of the insured will collect the entire amount of the policy.
Before considering a viatical settlement, a
policy or certificate holder seeking to viaticate due
to a terminal illness or chronic illness should check
with his insurance company or agent to find out if the
policy qualifies for an accelerated death benefit
This feature provides life insurance
benefits to insureds with terminal or chronic illnesses.