Ohio 2006), for an explanation on why viatical settlements
should be classified as investments.
Former beneficiaries of a contract that was sold pursuant to a viatical settlement
contract brought action against the purchaser of the policy alleging that the contract was void for failure to contain certain disclosures required by Viatical Settlement
Second, the provider must either be licensed to provide viatical settlements
under the laws of the state in which the insured resides, or if the insured's state does not require licensing of viatical settlement
providers, the provider must meet the requirements specified in the Internal Revenue Code.
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.
Although viatical settlements
were devised to help terminally ill viators and can be legitimate, the viatical industry has been characterized as "infected with scam artists, `ponzi' schemes, and other fraudulent activities."(6) Today individual investors and companies see significant profit opportunities in buying policies from people who are not terminally ill but who require cash and don't see any reason to continue paying their life insurance premiums.
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 code provides the following safe harbors for payments received from the insurance company and from Viatical settlement
Receipt of viatical settlement
proceeds could disqualify the recipient's eligibility for certain means-based entitlement programs such as Medicaid or other government benefits.
14, the NAIC Executive Committee had reinstated the Viatical Settlement
* Viatical settlement
. The sale of a life insurance policy to a third party, wherein the seller is terminally ill and has a life expectancy of no more than two years.
Life settlements are also variously referred to as "senior settlements," "high net worth settlements," and "high net worth transactions." In contrast, the term "viatical settlement
" is used to describe the sale of life insurance contract when the insured is terminally or chronically ill and expected to die within two years (see below).