Global InformationViatical settlement information
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A viatical settlement (from Latin viaticum, something received before death)[1] is the sale of a policy owner's existing life insurance policy to a third party for more than its cash surrender value, but less than its net death benefit.[2] Such a sale provides the policy owner with a lump sum.[3] The third party becomes the new owner of the policy, pays the monthly premiums, and receives the full benefit of the policy when the insured dies.[3]
Viatical settlements are ordinarily sold by, or on behalf of, an insured who is terminally or chronically ill.[3][4] As medical advancements improved the lives of those persons living with terminal or chronic illnesses, the life settlement industry emerged.[3][5]
Viatical Settlement as a term is considered out of date.[by whom?] The industry uses life settlement as the formal terminology. Technically, a viatical is a life settlement where the insured has less than two-year life expectancy. However, some jurisdictions, such as the U.S. state of Maryland, use the term viatical settlement instead of life settlement in their regulatory documents.[6]
- ^ Entry for "Viatical Settlement" at Merriam-Webster On-Line Dictionary, retrieved November 12, 2012, at http://www.merriam-webster.com/dictionary/viatical settlement
- ^ "Defining a life settlement". lisa.org. Archived from the original on 2016-03-04.
- ^ a b c d Life Settlement History, Life Insurance Settlement Association, retrieved March 4, 2012, at http://www.lisa.org/content/51/Life-Settlement-History.aspx
- ^ Xu, Jiahua (2020-01-02). "Dating Death: An Empirical Comparison of Medical Underwriters in the U.S. Life Settlements Market". North American Actuarial Journal. 24 (1): 36–56. doi:10.1080/10920277.2019.1585881. ISSN 1092-0277. S2CID 59483358.
- ^ Braun, Alexander; Cohen, Lauren H.; Malloy, Christopher J.; Xu, Jiahua (2018-06-05). "Introduction to Life Settlements". Harvard Business School Background Note (218–127).
- ^ "Understanding Viatical Settlements" (PDF). p. 2.