A viatical settlement is a financial transaction in which a lump sum cash payment is made to the Owner of a life insurance policy in exchange for the sale of ownership and beneficiary rights to the policy. Typically, this Term is used for transactions involving only terminally ill insureds who have a life expectancy of fewer than 24 months. For those insureds, the viatical settlement proceeds may be considered tax-free. The viatical settlement option allows policy owners to use the proceeds of the sale to help pay for medical bills, living expenses or anything else they choose.
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