Viatical Settlement Company

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Viatical Settlement Company

A company to which a life insurance policy holder sells his/her policy in exchange for a lump sum. The situation occurs when the policy's fair market value exceeds the cash surrender value that the insurer offers. The viatical settlement company must abide by applicable regulations, which, in the U.S., are set by individual states. The viatical settlement company becomes the policy's new beneficiary, is responsible for maintaining premiums, and, upon the death of the insured person, receives the benefit. The secondary market for life insurance began growing in the last part of the 20th century. The viatical settlement company is speculating on how long the insured person will live; indeed, it is in the company's financial interest for the insured person to die as soon as possible. A viatical settlement company is also called a life settlement provider.
References in periodicals archive ?
The NAIC viatical model establishes guidelines for fair payment to policyholders and mandates that viatical settlement companies make full disclosures to consumers.
While most viatical settlement companies are legitimate, others mislead, deceive, or even defraud viatical investors.
Founded in 1988, it is one of the oldest viatical settlement companies in the United States.
3) Viatical settlements are a specialized form of receivable financing under which viatical settlement companies buy from the policyholder, at a discounted rate, the right to receive death benefits under life insurance policies.
8) The initial sale of life insurance policies by terminally ill policyholders, known as viators,(9) to viatical settlement companies is subject to varying amounts of regulation at the state level, typically by a state's insurance department.
Prior to the insurance industry entering into this market, private investors formed groups commonly known as Viatical settlement companies for the purpose of purchasing, or taking assignments of, policies at a discount owned by the terminally ill.
The code provides the following safe harbors for payments received from the insurance company and from Viatical settlement companies.
31, 1996, viatical settlement companies will be able to pay out a percentage of the policy's face value to the policyholder, assume responsibility for premium payments, and become the policy's beneficiary.
The law puts Washington among a handful of states enforcing standards for viatical settlement companies.
Over the next two years, other viatical settlement companies introduced their own life-settlement products as the product got traction through advertising, promotion and word of mouth.
Established in 1989, Page & Associates was one of the first viatical settlement companies in the United States.