As you reach a certain age or encounter a certain type of personal and financial position, you may start to hear about something called a “viatical settlement.” That’s not necessarily an everyday term, though, so you might be a little curious. What is a viatical settlement, exactly, and what is the primary feature of such a settlement? Why would someone like you want to get a viatical settlement, and how can you be sure that doing so is the right call?
Never fear. The answers to all of these questions are below. Just read on and learn more about viatical settlements and how they might be able to transform a financial jam of yours into a brighter future for yourself and your loved ones.
The primary feature of a viatical settlement
What’s the primary feature of a viatical settlement? Simple: It’s cash. That’s what you’ll get on your end of the bargain if you agree to a viatical settlement.
Naturally, a viatical settlement is not free money. So what are you giving up on your end? In this case, it’s your life insurance policy, explain the experts at one trusted viatical settlement company. The payout that your beneficiaries would get when you pass away will instead be paid to the new owners of the policy (they’ll cover all future premiums, too).
If you have been paying into a life insurance policy for years, then you should have a pretty decent payout waiting for your beneficiaries when you pass away. But, sometimes, that payout isn’t worth nearly as much to you and your family as a similar amount of cash would be now.
Actually, cash is always worth more now than it is later. That’s thanks to the time value of money, which considers things like inflation and the fact that money you have now can be used to do things that increase your net worth later, like investing in a hot stock or simply paying a bill that would otherwise balloon into debt with interest. A viatical settlement will account for this by having the cash payment be a bit less than what the eventual life insurance payout will be worth.
Why choose a viatical settlement?
Life insurance is a good idea primarily because it provides a safety net for your loved ones in case of your untimely death, particularly when you’re still working and earning money to support your family. As you grow older, the eventual payout will look a bit less essential. Meanwhile, you may encounter expenses that require cash now — particularly medical bills, which are what viatical settlements are really designed to address.
We won’t be around forever. While we’re here, we want to enjoy our lives and, as much as possible, protect our finances and ensure that we have something to leave behind for our loved ones. Medical bills can be disruptive to these goals. And, as we grow older and battle health issues that may include terminal diseases, it becomes a bit easier for everyone to know when the health insurance payout is likely to arrive, which makes it easier to cut a fair deal in a viatical settlement. Under the right circumstances, a viatical settlement can be the best of all possible worlds. It’s a savvy financial move that will give you and your estate more wealth long-term while also giving you the cash you need now to pay down your bills and, hopefully, enjoy yourself. That primary feature of a viatical settlement — the cash — can mean so much more than just dollars and cents. It can mean a more beautiful life for as long as you’re around to enjoy it.
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