Risky Viatical Settlements Investments
Viatical settlements investments can be risky business for both parties involved. Let us first take a look first of all at how viatical settlements investments really work.
Because of the AIDS epidemic and the dramatic increase in the terminally ill as a result of this these people found themselves running out of money. The cost of medical attention and the medication to keep them alive put them in a very precarious financial situation.
This involves not only AIDS patients but anyone with a terminal disease such as cancer, Parkinson’s disease, leukemia and heart disease.
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How Do Viatical Settlements Investments Work?
- The investors purchase life insurance policies owned by the terminally ill through a broker. The ill people gain because they now find themselves in a position where they can pay their medical bills and even get themselves out of debt.
- The price paid is somewhere between 50% of the face value of the policy and 70% of the policy. Some of the investors are driven because they truly care about the terminally ill but others only invest for the sake of the profitability of the transaction.
- The investors obtain medical details of the insured person, verified by doctors and medical facilities involved
- the life expectancy of the person involved is usually between three and six years.
- The life insurance policy involved must be with a reputable life insurance company and must have been in force past the suicide period and the contestable period. The insured must be proven of sound mind and this transaction must not have been put into effect under any duress. An Incontestable Absolute Assignment is then effected.
- The investor now owns the policy. The new owner must pay the premiums.
- Upon the death of the insured the proceeds are paid to the Viatical Investor.
This is the process executed with viatical investments.
Why do I suggest that investing in viatical settlements can be risky business?
Medical science is improving every day. New cures are constantly being created. People who thought they were terminal live for many years after diagnosis. Here is what happens as a result.
- The investor has to wait much longer for a return on his or her investment. The investor may die before the insured and never see a profit. His beneficiary will receive the money in such a case.
- The insured has discounted the value of his or her life insurance policy. The beneficiary of the insured has lost because there are no more life insurance proceeds to collect upon the death of this loved one.
Be very careful with viatical settlements investments. Go through the proper channels.
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