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 ?
These transactions--known as viatical settlements--are carried out by viatical settlement companies and brokers who are regulated by the Insurance Department under Article 78."
Life insurers brought tort suit against viatical settlement companies and their court-appointed receiver, alleging that the defendants knowingly purchased and/or serviced life insurance policies from HIV-positive individuals who submitted fraudulent insurance applications stating that they had never been diagnosed or treated for AIDS or any other blood or immune system disorder.
* New York is now home to 7 viatical settlement companies. At the end of 2005, the companies had $42 million in assets and had purchased policies with a total of $16.9 million in face value.
Before life insurance companies offered accelerated benefits, entrepreneurs formed viatical settlement companies to provide accelerated payments to insureds.
The NAIC viatical model establishes guidelines for fair payment to policyholders and mandates that viatical settlement companies make full disclosures to consumers.
Our patients were able to return to work and no longer had to sell their life insurance policies to third party brokers known as "viatical settlement companies." In-patient hospitalizations diminished and the insurance companies began to pay for the combination "cocktail" therapy known as highly active antiretroviral therapy or HAART.
Viatical settlement companies purchase the discounted life insurance policies of people diagnosed as terminally ill.
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.
settlement.(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.(4) The viatical settlement company may then hold the policy, sell the policy to an individual investor, or pool the policy with others and sell fractions of the pool to investors.(5) The return to investors is the difference between the discounted value paid to the policyholder and the full value paid by the issuing insurance company upon the policyholder's death.(6)
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.(2)
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.