Viatical Settlement Lawyer

When you’re terminally ill, it can be very tempting to sell your life insurance policy proceeds to fund medical treatments and support your family. But viatical settlements are complicated, and should be thoroughly investigated.

In a viatical settlement the consumer (called a “viator”) sells his or her life insurance policy to a viatical settlement company (called a “provider”) for a lump sum payment that is a percentage of the policy’s face value. The viatical provider then becomes the beneficiary of the policy, and is responsible for making the premium payments. When the viator dies, the viatical provider collects the full face value of the policy.

Viatical settlements are regulated by each state’s insurance departments (link). State regulations and laws vary widely (link), but most require viatical brokers and providers to be licensed. A broker will “shop” your policy to several potential providers, looking for the best deal.

The value of an individual insurance policy is based on the:

* Age and medical condition of the viator
* Financial rating of the insurance company
* Type of insurance policy
* Amount of the premiums
* How often premiums must be paid
* Overall economic conditions

The Health Insurance Portability and Accountability Act (“HIPAA”) makes the proceeds of viatical settlements for the terminally or chronically ill tax-free up to the amount paid in premiums during the life of the policy. The Act defines “terminally ill” as having been “diagnosed by a certified physician to have a life expectancy of under 24 months.” You’re considered “chronically ill” under the Act if you are “permanently and severely disabled by an illness.”