What is a viatical settlement purchaser?

VIATICAL SETTLEMENT PURCHASER A person who invests in one or more viatical contracts. Policyowner – The person or party who owns an insurance policy. The policyowner is usually the insured and/or the beneficiary, but can be someone else. The policyowner is the only person who can make changes to a policy.

How do you buy viatical settlements?

In order to invest in viatical settlements, you must be an accredited investor as defined under Rule 501 of Regulation D of the Federal Securities Act of 1933. You need to be an accredited investor because there are specific risks that individuals without sufficient wealth and income should not take.

What is the name of the insured who enters into a viatical settlement?

What is the name of the insured who enters into a viatical settlement? Viator. Viator means the owner of a life insurance policy who enters into or seeks to enter into a viatical settlement contract.

Who receives proceeds in a viatical settlement?

Viatical settlements are for people who are terminally or chronically ill, no matter their age. Also, as noted, the proceeds from a viatical settlement typically aren’t considered taxable income. Life settlements are generally only available only to women age 74 and older and to men age 70 and older.

How does a viatical settlement work?

A viatical settlement allows you to invest in another person’s life insurance policy. With a viatical settlement, you purchase the policy (or part of it) at a price that is less than the death benefit of the policy. When the seller dies, you collect the death benefit.

What is the difference between a life settlement and a viatical?

The two main categories of insurance policy sales are life settlements and viatical settlements. A life settlement differs from a viatical settlement because the insured in a life settlement is usually healthy, while a viatical settlement pertains to a sale by an insured with a terminal illness.

What is the risk associated with buying a viatical?

There are risks associated with VIATICAL INVESTMENTs that individual investors may not recognize, and which unscrupulous promoters may misrepresent or fail to disclose. Funds invested in VIATICAL INVESTMENTs are not accessible on the demand of the investor.

Who is the owner and who is the beneficiary on a key person?

The owner is the party that pays the premiums and has the right to change the beneficiary. The insured is the person whose life is insured. If this person dies, the policy will pay out. The beneficiary is the party who will receive the payout if the insured dies.

What is the risk to the purchaser in a viatical settlement transaction?

The investor in a viatical settlement pays all future premiums left on the life insurance policy and becomes the sole beneficiary of the policy when the insured dies. A viatical settlement can be risky because the rate of return going into the investment is unknown and depends upon when the seller dies.

What is the primary feature of a viatical settlement?

So, What Is the Primary Feature of a Viatical Settlement? Essentially, it is the prepayment of a death benefit at a reduced rate. However, it is important to note that the cash settlement is provided in exchange for the sale and transfer of the ownership rights of the life insurance policy.

What happens if the owner of a life insurance policy dies before the insured?

If the owner dies before the insured, the policy remains in force (because the life insured is still alive). If the policy had a contingent owner designation, the contingent owner becomes the new policy owner.

Who should be the owner of a life insurance policy?

That is, the insured party should not be the owner of the policy, but rather, the beneficiary should purchase and own the policy. If your beneficiary (such as your spouse or children) purchases the policy and pays the premiums, the death benefit should not be included in your federal estate.

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