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What is a Viatical Settlement?
Why Viatical Settlements are Popular in Today’s Economy
What Are the Primary Features of Viatical Settlements
How to Get a Viatical Settlement
How to Viatical Settlements Work
Types of Viatical Settlements
How do Payouts Work?
Pros and Cons of Viatical Settlements
Viatical Settlement Alternatives
What is a Viatical Settlement?
In viatical settlements, Catalyst stands out as an expert facilitator, guiding individuals with chronic or terminal illnesses through the process of selling their life insurance policies to third-party buyers. Specializing in cases where life expectancies are under two years or where individuals can no longer perform two or more daily living activities. Catalyst Viatical Settlements navigates these transactions based on stringent health qualifications.
For those facing chronic or terminal illnesses, a viatical settlement can significantly enhance the quality of end-of-life experiences, alleviating concerns and offering substantial financial security to reduce unnecessary stress. Here are some primary reasons why an increasing number of individuals are choosing viatical settlements and the potential implications for those considering this path.
Eliminate Expensive Premiums:
Life insurance policy premiums are widely recognized for their high and escalating costs Frequently, these rising costs alone prompt policyowners to surrender, let lapse, or allow their policies to expire. A viatical settlement provides a lasting remedy by freeing policyholders from these burdensome premiums while presenting an additional cash value incentive.
Immediate Cash Flow:
Many individuals facing chronic or terminal illnesses require financial support, particularly in the later stages of their conditions. Even for those not facing serious illnesses but needing continuous care due to age, long-term medical expenses can pose a significant financial challenge. In the current low-interest rate environment, opportunities to generate income from retirement savings are limited. Viatical settlements offer immediate cash flow, delivering timely financial assistance when it is most critical.
Improve End-of-Life Quality:
A growing demographic comprising older adults, seniors, and individuals contending with terminal illnesses seeks to maximize the value of their remaining time. Viatical settlements present a unique opportunity to secure an additional income source that can be directed towards improving end-of-life experiences or making meaningful purchases. The flexibility associated with using settlement cash without any restrictions makes this option particularly appealing. For policyholders whose beneficiaries are financially stable and do not depend on the death benefit, the viatical settlement becomes an intriguing avenue to explore.
Maximizing Returns on Life Investment:
Remarkably, close to 90% of universal life insurance policies never result in a death claim payout. Instead of allowing an unwanted or unnecessary policy to lapse, a viatical settlement empowers policyowners to receive a more substantial cash sum than they would through surrendering or letting it lapse. For individuals facing chronic or terminal illnesses, the prospect of obtaining a return through a viatical settlement brings a sense of financial peace and satisfaction, especially when the alternative involves receiving less or no cash.
While the decision to pursue a viatical settlement is nuanced and dependent on individual circumstances, this comprehensive exploration underscores the significant benefits and financial advantages that individuals may consider when evaluating the suitability of a viatical settlement for their unique situation.
Catalyst Viatical Settlements acknowledges that viatical settlements were not always prevalent or easily accessible. However, the dynamics of our current economic climate have transformed them into an increasingly attractive choice for policyowners dealing with chronic or terminal illnesses. In the present scenario of low growth and nearly zero interest rates, lucrative investment opportunities are scarce—especially for older individuals facing significant medical expenses or relying heavily on savings.
By leveraging your life insurance policy through Catalyst Viatical Settlements, you have the opportunity to receive a cash return on the premiums you’ve faithfully paid for years. This opens up an additional income stream to address immediate medical needs, ensure future financial security, or simply derive greater joy from the time you have remaining. Importantly, there are no restrictions on how you choose to utilize the payout from your viatical settlement. Whether it’s covering medical expenses, purchasing a vehicle, funding a grandchild’s education, or indulging in a dream vacation, the money is yours to use as you see fit.
A viatical settlement, in this context, serves as a crucial financial lifeline, providing a final reassurance of stability.
The escalating costs of medical care and expenses, particularly as seniors live longer than ever, further drive the economic rationale behind viatical settlements. Chronic or terminal illnesses incur significant financial burdens, including insurance payments, premiums, long-term care facility expenses, repeated medical procedures, treatments, therapies, and necessary medications. For those experiencing these costs firsthand, the continuous rise in expenses for testing and treatments can stretch over years. In this context, a viatical settlement with Catalyst becomes a vital financial resource, offering a final assurance of stability.
Curious about obtaining a viatical settlement?
Viatical settlement providers, including Catalyst, are licensed entities committed to collaborating with policyowners to acquire their life insurance policies. While providers may not be obligated by fiduciary duty, selecting a reputable provider like Catalyst ensures a substantial payout and a trustworthy partnership throughout the viatical settlement journey.
Viatical settlement providers, such as Catalyst, are licensed entities dedicated to working with policyowners to acquire their life insurance policies. While providers may not be bound by fiduciary duty, choosing a trusted provider like Catalyst ensures a significant payout and a reliable partnership throughout the viatical settlement journey.
New to the catalyst viatical settlements? The terminology may seem intricate, but understanding key terms is crucial. Here are some frequently encountered terms that can help clarify the landscape.
Viatical Settlement: A viatical settlement involves selling a life insurance policy for cash, typically by an individual facing terminal illness (with a life expectancy of two years or less) or chronic illness. While resembling the process of a life settlement, qualifying for a viatical settlement may bring about advantageous tax treatment.
Cash Surrender Value: Over the duration of certain permanent life insurance policies (such as whole life insurance and universal life insurance), a cash surrender value accumulates. This vested amount becomes accessible to the policyowner upon early termination of the policy. Catalyst Viatical Settlements recognizes that this surrender value originates from the savings or investment account component inherent in specific policy types.
Face Value: The face value denotes the amount a policy will payout upon the insured’s death, also known as the death benefit. Opting for a viatical settlement means receiving an amount less than the face value but more than the cash surrender value..
If you find yourself in a situation where your life insurance policy is no longer feasible due to chronic or terminal illness, viatical settlements might present a viable solution. These settlements offer substantial payouts, providing individuals in such health conditions with the means to address immediate needs like medical expenses, healthcare support, or travel for treatment or anything else they deem necessary. While the process of securing a viatical settlement mirrors that of life settlements, viatical settlements typically conclude more swiftly due to the accelerated decline in the insured’s health. To initiate the sale of your policy, collaborate with a licensed viatical settlement provider by following the steps below.
Your journey towards a viatical settlement begins with determining your eligibility. Reach out to Catalyst, who can guide you through the initial assessment process.
Once you’ve validated your qualification, you may arrange the transfer of your policy to an authorized viatical settlement provider. Policyholders must grant providers consent to retrieve details about the insured individual’s health and their policy. This paperwork encompasses the insured person’s medical records and specifics of the life insurance policy.
Upon obtaining all required documents, the provider will conduct a thorough examination of the policy and the insured person’s medical records to assess the viatical settlement eligibility of the case. After confirming eligibility, the provider may present a formal offer for the acquisition of the policy.
Upon receiving a formal offer from an authorized provider, the subsequent step in pursuing a viatical settlement involves determining the course of action regarding the offer. Depending on your individual and financial well-being, you can either fully accept the offer or negotiate a partial agreement with the provider. An option might be retaining a portion of your death benefit while relinquishing the responsibility for future premium payments through a Retained Death Benefit. Alternatively, you may opt to sell your entire policy for its maximum value.
Upon accepting an offer, the funds from the settlement will be temporarily placed in escrow until all closing documents are finalized. Once the insurance carrier formally acknowledges the provider as the new owner of the policy, you will gain access to the settlement payout.
Catalyst Viatical settlements cater exclusively to individuals falling into either of two distinct categories: those classified as terminally ill and those identified as chronically ill. Despite the seeming similarity of these categories, there exist specific criteria for each within the realm of catalyst viatical settlements.
Terminally ill: This designation applies to individuals with a life expectancy of less than 24 months. Catalyst Viatical settlements offer a payout that can assist terminally ill individuals in covering substantial medical expenses or enhancing their quality of life during the period leading up to their passing.
Chronically ill: Individuals falling under this category are those who are no longer able to perform at least two activities of daily living (ADLs), including but not limited to feeding, dressing, grooming, walking or ambulating, toileting, bathing, and transferring (the ability to move from one body position or physical location to another, with or without assistance from an assistive device. Viatical settlements offer financial support to cover additional supervision costs or address healthcare needs for individuals in this category.
If you are contemplating a Catalyst viatical settlement, you might be interested in understanding the factors that influence the amount of money you could receive from selling your life insurance policy. Here are key considerations in the payout calculation:
Life Expectancy:
The estimation of the insured individual’s remaining life, based on their medical diagnosis and age, plays a crucial role in determining Catalyst Viatical settlement payouts. A longer life expectancy implies more premium payments the provider anticipates making before receiving the death benefit. Consequently, a provider expecting higher premium payments is likely to allocate a lesser amount to the upfront settlement payout.
Sum of Remaining Premium Payments:
The sum of remaining premium payments plays a crucial role in the payout calculation. Providers with higher expenses for premiums allocate less money to the settlement payout, resulting in lower viatical settlement payouts for policyholders with more expensive premium payments.
Size of Insurance Policy:
The size of the life insurance policy directly impacts the death benefit triggered upon the insured’s death. Larger policies generally command larger payouts from providers, reflecting the expectation of a substantial cash sum upon the insured’s demise.
Type of Insurance Policy:
Catalysts viatical settlements don’t mandate a specific life insurance type, different policy types can yield varying payouts. Permanent life insurance policies, including whole, variable, and universal life insurance, may offer higher payouts compared to term life insurance due to the requirement to pay more than the cash surrender value.
While policyholders will require the assistance of a licensed provider to determine the exact payout, these criteria provide insight into how various factors can impact the payout amount.
Pros:
Higher Payouts than Surrender Value: Catalyst Viatical settlements offer cash payouts exceeding both the cash surrender value and the value of accelerated death benefits (ADBs), a popular alternative to selling a policy.
Relief from Expensive Premiums:
Catalyst Viatical settlement providers assume the life insurance premiums for the policy’s duration, relieving policyholders from the financial burden of expensive payments.
Avoid costly premiums:
Catalyst Viatical settlement providers shoulder the responsibility of life insurance premiums throughout the policy’s existence, offering policyholders enduring relief from the burden of high payments.
Expeditious policy sale:
Due to the precarious health condition of the insured, Catalyst viatical settlements typically conclude swiftly. This prompt payout process proves beneficial for individuals facing chronic or terminal illness, assisting them in settling immediate debts or covering urgent healthcare expenses.
Benefit from flexible payouts:
Catalyst Viatical settlements grant policyholders complete freedom to allocate the payout as they see fit—whether towards house payments, medical bills, or other personal expenses.
Access a tax-advantaged cash sum:
Catalyst Viatical settlements are essentially tax-free, exempt from federal taxation.
Cons of Catalyst Viatical Settlements:
Forego the right to death benefits:
By selling a life insurance policy through a catalyst viatical settlement, policyholders relinquish the privilege of leaving death benefits to their beneficiaries.
Potential loss of access to financial assistance:
Engaging in a Catalyst Viatical settlement may render individuals ineligible for certain financial assistance programs, such as Medicaid.
Catalyst Viatical settlements cater exclusively to individuals falling into either of two distinct categories: those classified as terminally ill and those identified as chronically ill. Despite the seeming similarity of these categories, there exist specific criteria for each within the realm of catalyst viatical settlements.
For individuals uncertain about the suitability of a Catalyst Viatical settlement or those who do not qualify, several alternatives can be explored. Each option has its own advantages and disadvantages, making it advisable to consult with a financial advisor to determine the most appropriate choice for individual needs.
Policy Loans:
A policy loan, which involves borrowing against the accumulated cash value of a policy, provides flexibility in repayment, allowing you to pay back the loan at your own pace. The reassurance comes from knowing that the funds repaid go back into your policy rather than to an external lender.
It’s crucial to be aware that any remaining loan balance at the time of the policyholder’s death will be subtracted from the death benefit of the policy. Additionally, if the policy concludes before the loan is fully repaid, the outstanding loan balance may be subject to taxation.
Accelerated Death Benefits:
For individuals residing in long-term care facilities for at least six months or facing terminal, critical, or chronic illness, accessing Accelerated Death Benefits (ADBs) may be an option. Many permanent and term life insurance policies include Accelerated Death Benefit provisions, allowing policyholders with shortened life expectancies to receive a portion of their death benefits in advance. This provision proves advantageous, especially for those facing challenges in meeting minimum payments to keep their policy active, granting them access to a percentage of the policy’s face value without the need to surrender or sell their life insurance.
Despite the advantages of ADBs, This means that policyholders, if opting not to withdraw the entire death benefit, might still need to continue making monthly premium payments to ensure the maintenance of their policy.
Cash Surrender:
Some forms of permanent life insurance build cash value through premium payments. Policyholders have the option to perform a cash surrender, giving up their right to its death benefit in exchange for its cash surrender value.
Before deciding to surrender your policy, consider that the cash surrender value is lower than the full policy value, and there may be penalty fees for early policy cancellation.
Life Settlement:
If you don’t qualify for a viatical settlement but hold an active policy with a death benefit exceeding $100,000, you might still be eligible for a life settlement. This option operates similarly to viatical settlements but without stringent health requirements. Life settlement providers, like their viatical counterparts, provide larger payouts than cash values and assume the remaining premiums. Although the settlement payout is less than the death benefit and may be taxable, life settlements offer a reliable avenue to access funds from your policy.
Catalyst Viatical Settlement does not provide tax or legal advice. This information is intended for informational purposes only and should not be relied upon for tax or legal guidance. Catalyst Viatical Settlement recommends consulting with personal tax or legal advisors before engaging in any transaction.
Editorial Disclaimer:
Catalyst Viatical Settlement, aims to educate policyholders and those interested in life settlements. Resources and publications are created, researched, and updated by in-house experts to reflect the latest industry knowledge.
