The qualifications for a life settlement will differ far more dramatically from individual to individual than with viatical settlements
, primarily because health condition, an essential element to a viatication, is not necessarily a critical factor in a life settlement.
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.
The Virginia Viatical Settlements
Act, however, requires such companies to pay 60% to 80%.
First, the payments must be made by a viatical settlement
In order to make their medical records available to third parties in the viatical settlement
process, insureds must authorize their physicians and other health care givers, in writing, to release their private medical records.
If the minimum price floor is set below the actuarially fair price, then the price regulation will have no effect on market outcomes in a perfectly competitive market as price competition among viatical settlement
firms will ensure that the market price is already higher than the minimum price.
Ray, Comment, The Viatical Settlement
Industry: Betting on People's Lives Is Certainly No "Exacta," 17 J.
Furthermore, individuals qualifying for this tax-free benefit must use a viatical settlement
provider who is licensed in the state where they live.
There are two basic roles for viatical settlement
companies: providers, who buy the policies themselves and hold them as the named beneficiary thereunder, and brokers, who act as intermediaries between viatical settlement
providers and viators by performing underwriting functions, and negotiating a fee to be paid by the viatical settlement
The Internal Revenue Service has taken a more enlightened position in relation to the second possible event where an insured assigns his life insurance contract to the insurance company (as contrasted with the above PLR in which the sale was to a Viatical settlement
company) that issued the policy and the accelerated death benefit is paid pursuant to a contract term.
And in any case, while it may once have been true that a single test showing a lowered T-cell count could result in a large viatical settlement
, that's not the case today.
Oftentimes confused with viatical settlements
, life settlements are the sale of a life insurance policy by a policy owner for less than the face value but more than the cash surrender value of the policy to a third-party investor.