Selling Life Insurance Policies: Viatical Settlements Analysis

Viatical settlements allow people with a life expectancy of two or fewer years to sell their life insurance policy for a value higher than the policy’s current face value but less than its death benefit. It is primarily used by people with terminal illnesses to cater to their healthcare expenses, however, the law allows healthy people to sell their life insurance policies. I support viatical settlements because they allow a sick person to clear his or her medical expenses without putting a strain on family resources. Additionally, the funds are received in time to cater to the sick person’s immediate financial needs and the family.

Once the verification process is complete, the money is received in a few weeks. Viatical settlements also relieve the policy owner from paying monthly premiums, since the burden is passed on to the buyer. The viatical settlements funds do not have restrictions from the insurance company, and the seller can choose where to use them, including traveling with the family to enjoy the last days of one’s life. The HIPAA Act of 1996 and other insurance laws exempt the proceeds from a viatical settlement from tax payments (Commito, 2018). A viatical settlement gives the seller more money than surrendering their policy to the insurance company to receive its cash value. To some policy owners, viatical settlement gives more benefits than waiting for the death benefit.

The courts act as a referee for viatical settlement activities to ensure that viatical settlement brokers are legally registered and operate within the law. Courts also protect life insurance policy sellers and buyers by resolving conflicts that may arise during or after a viatical settlement (Commito, 2018). Moreover, courts make judgments and rulings that could change the processes of the viatical settlements. Therefore, both sellers and buyers can seek the court’s interventions to resolve a conflict involving their viatical settlement contract.


Commito, T. F. (2018). The tax cuts and jobs act: Viatical settlements, and the transfer-for-value rules. Journal of Financial Service Professionals, 72(4).

Dębicka, J., & Heilpern, S. (2017). In Proceedings of 20th AMSE-Applications of Mathematics in Economics, International Scientific Conference (105-116). Szklarska Poręba. Web.

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