Straight Talk about Viatical Settlements
“For those who seek to understand it, death is a highly creative force. The highest spiritual values of life can originate from the thought and study of death.” — Elisabeth Kubler-Ross
To be honest, until researching for this post, I never knew much about viatical settlements. Sure, I’ve seen the advertisements over the years about how people can get cash for their life insurance policies, but there wasn’t ever anything too personal prompting me to go check out the websites or click on the banner ads.
In the LGBT community, this topic almost seems antediluvian with many gay men living healthy lives as HIV positive. Then I thought about it and realized that’s a narrow view since we all have some chance of getting or knowing someone with a serious illness. Plus it’s a known statistic that lesbian women are at a higher risk for breast cancer so it seemed like a relevant topic to cover in the context of finances and planning.
The history of viatical settlements can be found at ViaticalWeb, a non-profit resource. Here’s a blurb: “People who are diagnosed with serious illnesses often face terrible financial difficulties. Medical bills mount up, even for those with health insurance; for those without, medical expenses can be catastrophic. The financial picture is worsened when ill health forces a person to work less or not at all.”
“While these problems are as old as money itself, viatical settlements are a relatively new development in response to them. They first came to widespread notice in the 1980s, as a result of the rapid rise of HIV and AIDS.”
“For those men who had life insurance, then, selling their policy was an expedient way to meet their financial needs. The availability of sellers prompted the development of a fledgling viatical industry. In 1989, there were three investment companies specializing in viatical settlements. Today, there are fifty, and it is a billion-dollar industry.”
Hence the warning and hope from GrowthHouse.org: “While many people in the viatical settlement industry are honorable folks who provide a real service, we hope that there’s a special corner of Hell reserved for the unscrupulous con artists in the business.”
They write, “It can be uncomfortable to talk about money and estate planning, particularly if death is near. But it’s important to integrate financial planning into the overall process of getting one’s affairs in order.”
“A viatical settlement basically involves selling your life insurance policy at a discount to someone else who will collect the face value when you die. Most viatical settlement providers pay a lump sum from 50% to 85% of the face value of your policy, depending on your life expectancy.”
“Are viatical settlements a good deal? Like most things, the answer depends on your personal situation and the specific deal you are offered. Consider all your alternatives and don’t assume that a viatical settlement is the only way to go. There are other ways to get cash at the end of life such as a reverse mortgage or use of Accelerated Death Benefits on your life insurance, if such benefits are available to you. These options often offer better payouts than a viatical settlement.”
Want more info then read the book by Gloria Wolk called: Cash For The Final Days – A Financial Guide For The Terminally Ill And Their Advisors. Ralph Nader wrote its introduction, “Until this book, there was no guide for the terminally ill and their loved ones through the maze of the Viatical Settlement industry; no way to maximize the cash going to the ill person; no help in making the decision of whether to use Viatical Settlements at all; no discussion of other options for cash available to a very ill person. Gloria Wolk has filled that void with this useful book. The book is an easy to understand, step-by-step approach to protect yourself when you need money near the end of your life.”
Now that’s an uplifting topic for a Monday morning. Need something a little more lighthearted to start you day? Then check out Queerty. Frivolous gossip and gay news can be a grand distraction.
I took a long hard look at investing in viatical settlements. What put me off in the end was the thought that the sooner the insured died the better my return would be. Certainly, the people invloved need the money and there is (in my opinon) nothing immoral about it, I just did not like the idea of benefiting from someone else’s death.
Actually, most life insurance companies will advance a portion of the proceeds if you are expected to die within approximately 12 months. Even if this is not an option explicitly written into your contract, chances are they will make a better offer than a viatical company.
Typically, they’ll give about 50% of the value of the policy, less annualized interest at about 8%, and then your heirs still get the rest when you shuffle off to the afterlife. In most cases, this is a far superior option to the viatical settlement.
My first book, Cash for the Final Days, no longer is available for purchase but there are many copies in libraries. The book has some useful chapters but since it was published in 1997 and the industry has changed greatly, we are not republishing it.
Among the changes: No company pays more than 30%, and most are not interested in policies smaller than $1 million (although a few will accept death benefits of at least $250K).
That said, anyone who needs advice about selling a life insurance policy due to serious illness can contact me directly (ggwolk@Viatical-Expert.net). I never charge a fee for advising people who are seriously ill.