Viatical Settlement
Act by a person who is terminally ill of cashing in a life insurance policy to pay for the necessary associated illness, medical expenses, and final wishes. This terminally ill person contacts a viatical agent who bids the life insurance policy on the terminally ill person to the many viatical settlement companies. The package that is sent out for bids includes the terms of the life insurance policy as well as the medical prognosis of the terminally ill person. The viatical settlement company that is awarded the bid agrees to pay 50% to 80% of the FACE AMOUNT of the policy, varying according to the gravity of the terminally ill person's condition and LIFE EXPECTANCY. In turn, the viatical settlement company sells the terminally ill person's life insurance policy to an investor who then becomes the POLICYHOLDER as well as the BENEFICIARY and assumes payment of the premiums of the policy. Upon the death of the terminally ill person, the investor will receive 100% of the life insurance policy's face amount from the insurance company. The sooner the terminally ill patient dies, the higher the investor's return. While returns of 15% to 20% are typical for investors, the policies can pay off a substantially higher return if death occurs early.
Popular Insurance Terms
Maximum amount of a specified type of insurance coverage, according to underwriting guidelines, that an insurance company feels it can safely underwrite on a particular exposure without ...
Coverage for automobile or aircraft operators if they are sued for negligently killing or injuring a passenger. The PERSONAL AUTOMOBILE POLICY (PAP) provides MEDICAL PAYMENTS INSURANCE for ...
Limit allowed by law on employee salary reduction plans. Many pension plans, as well as the popular 401 (k) plan, allow employees to set aside pre-tax dollars in a company-sponsored ...
Smallest face amount of life insurance that an insurance company will write on any one person. ...
Rules used by state regulators to value securities on the books of insurance companies. Bonds with acceptable credit quality are carried at amortized value, which is the face value plus or ...
In an insurance policy, sentences and paragraphs describing various coverages, exclusions, duties of the insured, locations covered, and conditions that suspend or terminate coverage. ...
Annuity that can be paid either with a single premium or a series of installments. For example, an annuitant pays a single premium of $100,000 on June 1 of the current year and is scheduled ...
Demographic designation used in life insurance to calculate premium rates for life and health insurance and annuity contracts. Since females have a longer life expectancy than males of the ...
Bureau insurer that files its statistical and underwriting experience with a rating bureau. ...
Have a question or comment?
We're here to help.