If you are terminally ill or chronically ill, you might be able to sell your life insurance policy to another person (a third party). You usually have to sell your life insurance policy for a lower amount of the full face value. The amount that is paid is usually based on the remaining life expectancy of the insured (you). The death benefit usually ranges from 50 percent to 80 percent. When you die, the third party will get the full death benefit.
Before making a final decision to make a viatical settlement to pay for your long-term care needs, you may want to contact your State Attorney General Office or your State Department of Insurance.
Listed below are some opportunities and requirements/limits for viatical
settlements:
| Viatical Settlements Opportunities: | Viatical Settlements Requirements/Limits: |
| You can get money immediately, although it will be less than your original death benefit. You can use the money to pay for your long-term care needs. | If you live longer than expected, you might need more money to pay for your long-term care needs. |
| If you don’t qualify for a long-term care policy, this might be an option for you to pay for your long-term care needs. | The settlement costs might not be enough to pay for your long-term care needs. |
| After making the settlement, you don’t need to continue making premium payments for your life insurance. This is because you don’t own the policy. | The death benefit will go to the third party. You won’t be able to leave anything to your heirs (family or friends). |
| This may be tax-free. For more information, you should check this out with the Internal Revenue Service (IRS). | Most people can’t get these types of settlements because their life expectancy is considered to be more than five years. |
Related: Reverse Mortgages vs. Viatical Settlements