VIATICAL SETTLEMENTS / LIFE SETTLEMENTS / ACCELERATED BENEFITS

The following information is excerpted from "Selling Your Life Insurance Policy: What you should know about Life and Viatical Settlements" from Connecticut Insurance Department's website.

VIATICAL SETTLEMENTS

A viatical settlement is an option for people living with a terminal illness. Selling an insurance policy through a viatical settlement provides cash that can be used to pay for medical and living expenses. In a viatical settlement, you can sell your life insurance policy to a third party. At the time of the sale, you receive a discounted cash payment in exchange for giving up your claim for the death benefit. The buyer becomes the new owner and/or beneficiary of the life insurance policy, pays all future premiums and collects the entire death benefit when you die.

LIFE SETTLEMENTS

A life settlement is similar to a viatical settlement in that it is the sale of a life insurance policy to a third party. You as the original owner of the life insurance policy receive cash for the policy. The buyer becomes the new owner and/or beneficiary of the life insurance policy, and must pay all future premiums. The new owner collects the entire death benefit when you die. Reasons for selling a life insurance policy include: changes in the financial needs of dependents, a desire to eliminate premium payments, and the need for cash to meet current expenses. Policies may be sold directly to a company or through a broker who works for you.

ACCELERATED BENEFITS

Accelerated benefits, or living benefits, are the proceeds of life insurance policies that are paid by an insurance company to you, the policy holder, before you die. If your policy has an accelerated death benefit provision, it could pay you a substantial portion of your policy's death benefit and you would avoid the need to sell the policy.

CONNECTICUT DEPARTMENT OF INSURANCE

The Connecticut Department of Insurance requires anyone selling Viatical Settlements to be licensed. The Department also provides information on buying into or selling one's insurance policy to a Viatical Settlement. Contact: Consumer Help Line, 800-201-3447

For additional information on terminally ill individuals inquiring to sell their Viatical Settlements, see the United States Federal Trade Commission bulletin, http://www.ftc.gov/opa/1995/12/via.shtm

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SOURCE: Connecticut Department of Insurance
PREPARED BY: 211/rj
CONTENT LAST REVIEWED: January2012