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Viatical Settlements

Viatical settlements offer immediate cash payouts for terminal clients who sell their existing life insurance policies. If you’ve been diagnosed with a terminal illness and own an existing life insurance policy but you’re not sure what to do with your policy, we hope this resource helps provide you with a comprehensive understanding of viatical settlement options and how to sell your life insurance policy for top dollar.

Viatical settlement transaction

*This is not financial advice. Consult a licensed viatical settlement broker, provider, tax, or financial professional.

What’s a Viatical Settlement?

what is a viatical settlement
In simple terms: When someone who’s terminally ill sells their life insurance policy to a specialty company (provider) for financial relief. The provider becomes the beneficiary and collects the death benefit.

The Supreme Court enacted the secondary sale of life insurance over 100 years ago. Viaticals are safe & federally regulated today. FINRA and most state financial regulatory agencies oversee viatical settlement transactions.

Since time is of the essence, the process of selling a policy is handled much faster than a traditional life settlement. There is still a bit of paperwork involved and everyone’s situation is unique. Payouts are typically tax-favored and higher than the cash surrender value or approximately 40-80% of the death benefit. Viatical settlement brokers are fiduciaries who help facilitate much like a real estate agent and are paid a fee for performance.

Term life insurance, whole life, and other permanent policies can be sold but not everyone qualifies. Eligibility is based on health and policy characteristics. Usually the higher the mortality rate, the higher the payout.

Life settlements are similar to viatical settlements except for life settlements are reserved for seniors over 65 years old regardless of health status and viatical settlements have no age restrictions.

Overall, viaticals are a powerful financial tool, yet confusion and outdated information often obscure their potential to benefit those facing difficult situations. Surprisingly, every year viatical settlements provide thousands of people more money than they expected from their policies. Here is an image with a more technical definition;

Viatical Settlements Defined

How to Sell Your Policy for Top Dollar

Everyone’s situation is a bit different and there is no guarantee you can sell your policy. Here’s a roadmap to help you navigate different sections of this page;


How do you qualify for a viatical settlement? The criteria is pretty basic but you would need to speak with a viatical broker just like any other health and life insurance product to get a free appraisal for your situation. Here’s a general guideline;

  1. Must have proven terminal or chronic illness
  2. Policies must be at least 2 years old
  3. The face value or death benefit is generally above $100,000
If you think you may qualify for a viatical settlement, the next steps would be to provide authorizations to start the underwriting process. Your viatical broker helps facilitate your auction application. Here are the signatures required;
  1. HIPPA: Allow access to 3 years of medical history.
  2. Life Release: Allow carriers to provide policy copy and illustrations.
  3. Disclosure: Agreement to terms of service.
  4. Closing Documents: If an offer is accepted.

Viatical Pros & Cons

Selling a policy is a big decision that should not be taken lightly. It’s important to weigh the benefits with the costs to determine if a viatical can help you.
pros and cons of viatical settlements


  • Help cover medical or end-of-life expenses.
  • Improve the quality of life for yourself and others.
  • Average 5x cash payouts above surrender value (LISA 2022). Term policies may apply.
  • Keep the original intent of the policy.
  • Pocket future premiums.
  • Possible tax-favored benefits for end-of-life and long-term care rollover.
  • Proceeds can typically be spent without restriction.


  • Beneficiaries will not receive the full death benefit.
  • Possible Medicaid ineligibility.
  • Loss aversion: A misconception of life insurance as property that can be sold like a home.
  • Viaticals can take time to settle which can be an inconvenience and at times stressful during an already difficult situation.
  • Your creditors can claim proceeds.
  • The process takes time & paperwork.

Weigh Your Options

Is a viatical settlement your best option? It should not be a hasty decision. Here are some reasons why people sell their life insurance policy & alternative options to consider;
  • Keep the policy.
  • Check if your policy has Accelerated Death Benefits (ADB).
  • Consider a policy loan if possible.
A cancer patient laying down with viatical company logo

Choosing the Best Viatical Settlement Company for You

Selecting a top viatical settlement company is crucial to getting the best offer for your life insurance policy. Make sure you are working with a licensed, reputable viatical company. Here are the types of viatical companies you should know exist;


Providers are specialty licensed viatical companies who ultimately purchase your life insurance policy. They are the ones making the offers. They represent multiple funds owned by institutional investors. They buy large portfolios and are not considered with any one policy. Providers are NOT fiduciaries and their goal is profitability. It is not in the consumer’s best interest to work directly with a viatical settlement provider! However, providers are the trusted source of liquidity and are held to a high ethical standard.

Top Viatical Providers

  • Coventry & Coventry Direct
  • Abacus Life


Unlike providers, viatical brokers are licensed agents who have a legally bound fiduciary duty to their client’s best interest. Think of a viatical broker like a real estate agent. Brokers are paid a fee to represent the seller and list the policy at auction among the top providers competing to buy a policy thus creating fair market value. The goal is to negotiate multiple offers increasing the payout amount and exceeding their commission. Viatical brokers have been known to charge excess fees so make sure they can justify the cost accordingly.

Top Viatical Settlement Brokers

  • Bridge
  • American Life Fund
  • Life Insurance Settlements


There are lots of marketing companies posing as top viatical settlement companies but are not licensed and often serve providers to generate customers. Do your research and ask if they are a licensed entity.

Understanding the Process & Taxes

As mentioned, viatical settlement transactions are similar to real estate or selling a home. The average policy sale can take 3-6 months to close before proceeds are paid out. Tax to your tax & financial advisor to plan the proceeds appropriately. Assuming you’re eligible and have an idea of what viatical company you want to work with, here is a process outline and some tax considerations;


  1. Application
  2. Offer(s)
  3. Closing
  4. Transfer Funds


  1. You’re typically not taxed on the amount you paid into the policy called your cost basis (see examples below)
  2. Viaticals are considered tax-free for terminal illnesses and/if rolled into a long-term care or other medically necessary vehicles
  3. Not tax advice: Check with your tax professional, state and federal tax offices.

Real Life Examples

Better understand how viaticals work with these case studies;


Jim was 58 when he was diagnosed with renal kidney disease. The best hospital for him was out of state, he was self-employed and the costs incurred made him contemplate selling his family home. After doing a bit of research on illness financial options, Jim learned about viaticals and realized he had a renewable term policy for $250,000. He contacted a viatical settlement broker who was able to help Jim successfully sell his policy for $50,000 to help cover costs and keep his home.


Jill was a stay-at-home mom with a husband and three children when she found out she was diagnosed with a life-threatening cancer. Jill had a $300,000 whole-life policy with only $20,000 in cash value. She was able to sell her policy for $160,000 and spend her final days enjoying her family like never before.

“Never lose infinite hope”

– Martin Luther King, Jr.


Who benefits from a viatical settlement?

Those who benefit from a viatical settlement include the seller of the policy, the viatical broker & the buyer of the policy called a provider (investor).

Who buys viatical settlements?

Those who buy viatical settlements are investors called providers who are specialty regulated life insurance companies who buy the policies from the insured.

What is the purpose of a viatical settlement?
The purpose of a viatical settlement is to provide the seller with financial relief and the buyer with profit.
How much do viatical settlements pay?
Viaticals can pay 20-80% of the death benefit or 5 times the surrender value on average (LISA).

Additional Resources

Viatical settlements are a safe option for anyone under the age of 65 or over looking to get money out to their existing policy to help cover the things that matter most. Although a viatical is not for everyone, it’s important to consider all your options to get the help you need. If you have any questions regarding the resources below contact one of our licensed viatical settlement agents.

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