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Viatical Settlements

Hope Settlements for chronically or terminally ill Patients are defined as a Viatical Settlement. It involves the sale of your life insurance policy once you have become chronically or terminally ill.

VIATICAL SETTLEMENTFrom Wikipedia, the free encyclopedia

A Viatical Settlement (from the Latin “Viaticum”)[1] is the sale of a policy owner’s existing life insurance policy to a third party for more than its cash surrender value, but less than its net death benefit.[2] Such a sale provides the policy owner with an lump sum.[3] The third party becomes the new owner of the policy, pays the monthly premiums, and receives the full benefit of the policy when the insured dies.

“Viatical Settlement” typically is the term used for a settlement involving an insured who is terminally or chronically ill. [3] A person generally is chronically ill if the person (1) is unable to perform at least two activities of daily living, such as eating, using the toilet, bathing oneself, or dressing oneself; (2) requires substantial supervision to protect himself or herself from threats to health and safety due to severe cognitive impairment; or (3) has a level of disability similar to that described in (1) as determined by the U.S. Secretary of Health and Human Services.[1] A person generally is terminally ill if the person has an illness or sickness that can reasonably be expected to result in death within two years.

All projected life expectancies ranging from 6 months to 20 years may qualify for a Hope Settlement. There is no obligation or fees involved to apply for a Hope Settlement and we welcome all inquiries.

[wpspoiler name=”WHO SHOULD CONSIDER A HOPE SETTLEMENT”]

All chronically or terminally ill patients looking to remove financial stress, should explore a Hope Settlement before surrendering or cancelling their life insurance policy. If you are uncertain if you qualify for a Hope Settlement, then take advantage of a FREE policy evaluation. We cover all the expenses, leaving you with no out of pocket cost, places you under no obligation, and your complete privacy is upheld. It’s the best place to start and gives you another financial alternative to choose from. As you address financial challenges, and learn more about the various options available, you may very well find that selling your insurance is just the solution you’ve been looking for”.

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EXAMPLE’s

#1 #2 #3 #4
39 Female 54 Male 79 Male 82 Female
Ovarian Cancer Lung Cancer Heart Disease Alzheimer’s Disease
$350,000 Policy $55,000 Policy $1,000,000 Policy $5,000,000 Policy
Hope Settlement Hope Settlement Hope Settlement Hope Settlement
Paid $262,500 Paid $30,800 Paid $352,000 Paid $1,750,000

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[wpspoiler name=”DETERMINING THE POLICIES VALUE”]

The value of your life insurance policy is based upon several variables. The solvency of your insurance company, the type and age of your policy, premium schedules, existing cash value and your current health are all a factor. The underwriting of a Viatical Settlement is somewhat the opposite of when you first applied for coverage. If your health has declined since you initially took out your policy, often a hidden value is created.

Each life insurance policy has to be looked at individually and no two cases are the same. The primary factors that determine the present day value of your policy are the projected premium expenses and life expectancy.

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[wpspoiler name=”Life Expectancy Providers”]

Life Expectancy Providers (LEPs) are specialized independent companies that issue life expectancy reports (LERs) that estimate the life expectancy (LE) of an individual (Typically the insured individual whose life insurance policy is involved in a life settlement review). Life expectancies are not a prediction of how long an individual will live, but rather are the average survival time amongst a particular risk cohort. Risk cohorts are typically grouped by age, gender, smoking, and relative health/morbidity. LE is a key component in the pricing of a Viatical Settlement.

LEPs are typically made up of actuaries and medical underwriters who utilize actuarial models based on published or proprietary mortality (life) tables and medical underwriting based on various debits/credits for various morbidity characteristics similar to the medical underwriting performed by life insurance company underwriters and reinsurance underwriters.

Hope Settlements has a board certified, licensed, and practicing physician who acts as Chief Medical Director. This insures that proper LE’s are being considered when evaluating cases that involve a terminal or critical illness.

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[wpspoiler name=”VIATICAL AND LIFE SETTLEMENT HISTORY”]

Although the secondary market for life insurance is relatively new, the market was more than 100 years in the making. The life settlement market would not have originated without a number of events, judicial rulings and key individuals.
The U.S. Supreme Court case of Grigsby v. Russell, 222 U.S. 149 (1911) established a life insurance policy as private property, which may be assigned at the will of the owner.[2] Justice Oliver Wendell Holmes noted in his opinion that life insurance possessed all the ordinary characteristics of property, and therefore represented an asset that a policy owner may transfer without limitation.[2] Wrote Holmes, “Life insurance has become in our days one of the best recognized forms of investment and self-compelled saving.” This opinion placed the ownership rights in a life insurance policy on the same legal footing as more traditional investment property, such as stocks and bonds. As with these other types of property, a life insurance policy could be transferred to another person at the discretion of the policy owner.
This decision established a life insurance policy as transferable property that contains specific legal rights, including the right to:
• Name the policy beneficiary
• Change the beneficiary designation (unless subject to restrictions)
• Assign the policy as collateral for a loan
• Borrow against the policy
• Sell the policy to another party

In the 1980s, the U.S. faced an AIDS epidemic.[2] AIDS victims faced short life expectancies, and they often owned life insurance policies that they no longer needed.[2] As a result, the viatical settlement industry emerged.[2] A viatical settlement involves a terminally or chronically ill person (with less than two years life expectancy) who sells his or her existing life insurance policy to a third party for a lump sum.[2] The third party becomes the new owner of the policy, pays the premiums, and receives the full death benefit when the insured dies.[2] Because of medical advancements, people with AIDS started living longer and therefore viatical settlements became less profitable.[2] As a result, the life settlement industry arose.[2]
A life settlement is similar to a viatical settlement, but in a life settlement transaction, the insured is typically at least 65 years old and is not chronically or terminally ill.[2]
In 2001, the National Association of Insurance Commissioners (“NAIC”) released the Viatical Settlements Model Act, which set forth guidelines for avoiding fraud and ensuring sound business practices. Around this time, many of the life settlement providers that are prominent today began purchasing policies for their investment portfolio using institutional capital. The arrival of well-funded corporate entities transformed the settlement concept into a regulated wealth management tool for high-net-worth policy owners who no longer needed their policies.
On April 29, 2009, the United States Senate Special Committee on Aging conducted a study and came to the conclusion that life settlements, on average, yield 8x more than the cash surrender value offered by life insurance companies.[3]

VIATICAL SETTLEMENTS MODEL ACT

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Though Viatical Settlements and Life Settlements, (often called Senior Settlements) are essentially the same thing, their taxation varies. The definition of terminal is expressed in years and varies from state to state and is typically two to four years. This stipulated period is crucial in assessing Viatical Settlement taxation and is why you should speak directly to a Family Service Counselor.

If your life expectancy is beyond the definition of terminally ill as defined by your state, the proceeds of your life settlement may be considered partially taxable, based upon what you have paid in, cash value and the ultimate sales price.

Viatical Settlements,  however are typically considered tax free if you are deemed to have a terminal illness as is defined  by your specific State .   A tax expert should be consulted in all cases once you have a projected value of your insurance policy.   In fact, some life settlement proceeds may be deemed as ordinary income and may affect certain state and government programs that are based upon income thresholds.  This is often overlooked.

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[wpspoiler name=”Viatical Settlements comparison?”]

It may be easier to associate the sale of your life insurance policy with real estate. There are typically a buyer’s agent and a seller’s agent. in a real estate transaction, there are typically a buyer’s agent and a seller’s agent with respective fiduciary responsibilities. You can go directly through the selling agent if you are purchasing a home and may get a better deal from the agent with respect to their fee, but you may also put yourself in jeopardy of making a mistake in assessing value that no one on your side of the transaction is aware of.

Real estate value is typically determined by an appraisal. The same is somewhat true with Viaticals. With real estate, your location, structures, land and various other variables are assessed against recently transacted property closings.

Though your insurance company, policy size and type are all factors used to determine the value of your Viatical Settlement; the largest variable is your (LE) or projected life expectancy.  It is a medical underwriter that works privately and confidentially, behind the scenes.

The underwriter is called a life expectancy provider and is used in all Life Insurance Settlements. The life expectancy provider will assesses your life expectancy based upon your medical information and your physician’s prognosis of your health. Once the life expectancy provider has provided an LE, the Viatical Providers and funding companies can then do their internal calculations on your policy to arrive at a current value in the Viatical market.  This is one of the many reasons why you should choose Hope Settlements as your Viatical Facilitator.

Hope Settlements has a licensed staff physician who reviews and has oversight with all LE’s being assigned during the policy evaluation process.This is especially important and vital to all critical and terminally ill patients looking to turn their policy into immediate cash.

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