What to do with that Life Insurance Policy
*This post is part of a sponsored series with Mason Finance*
When you have children, most people take the responsible financial jump of starting a life insurance policy. This is meant to protect their families from the debt and financial burden that comes with the death of a loved one. But what happens to that life insurance policy if one becomes chronically or terminally ill, and they are having trouble covering their costly needs NOW?
Thankfully in that situation, they most likely will have access to something called a viatical settlement. A viatical settlement is simply the selling of a life insurance policy for more than the cash value, but less than the face value or death benefit.
Making the decision to sell off a life insurance policy isn’t always an easy one; but for someone that is fighting a terminal or chronic illness, it is a great way to help take care of expenses now. There are so many circumstances that come into play; so the decision isn’t going to have the same reasoning for each person that does it.
For someone facing a terminal illness who might have young children at home; a viatical settlement can mean the difference between housing and feeding the family while they still have the ability to do so. For someone who is older that just wants to enjoy the time they have left; this type of settlement can help create a nest egg that will allow them to live their best life.
The criteria for being eligible for a viatical settlement isn’t hard to meet either. If you meet the following, you can successfully sell your existing policy:
- Health: Viatical settlements are for people who are terminally or chronically ill. Generally, this means a person with a limited life expectancy. You will need your attending physician to write a letter verifying that you have a terminal or chronic condition.
- Policy Type: Universal, whole, and term life insurance policies are all candidates for a viatical settlement. The majority of the policies that get transacted are universal life.
- Policy Size: Policy size should be at least $50,000 in face value.
That’s it; if you meet these qualifications, you are eligible for a viatical settlement. According to Mason Finance the determination for Terminally vs. Chronically Ill is as follows:
Terminally ill is defined as having a life expectancy of fewer than 24 months. The second is for someone who is chronically ill. Chronically ill is someone who can no longer perform two or more of the following activities; eating, using the toilet, bathing oneself, or dressing oneself. Chronically ill also describes someone who requires substantial supervision to protect him/herself from threats to health and safety.
A Doctor can help and will be required to make that determination for the purpose of a viatical settlement. The truth is, nobody wants to have to face this type of issue, but everyday people have to nonetheless.
The decision between what is best for now, and what is best for the future can only be determined by the family; If you decide that this type of settlement is best for you now, just make sure to weigh your options so as to make the very best decision.
