TITLE

Viatical Settlements: Life Insurance as a Liquid Asset for the Seriously III

AUTHOR(S)
Sutherland, William P.; Drivanos, Patricia C.
PUB. DATE
May 1999
SOURCE
Journal of Financial Planning;May99, Vol. 12 Issue 5, p74
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article discusses the significance of viatical settlements. Even for persons with moderate to high net worth, coping with serious illness almost always diminishes assets. A viatical settlement provides a way to raise needed cash when other options are undesirable or exhausted. It also can provide a means to protect earning assets through the sale of a non-earning asset, namely, a life insurance policy. A viatical settlement is the outright sale of a life insurance policy to a third party for an agreed-upon percentage of tbe face value of the policy. Viatical settlements offer a financial option to any client facing a terminal illness who needs funds to cope with extraordinary costs. Even for clients with significant net worth, converting an asset to cash often triggers a taxable event. In many cases, a viatical settlement provides a tax-free alternative to fill that cash need, perhaps, at the same time, protecting the principal and earnings potential of a portfolio or real estate asset. As always, the viatical option must he considered in the context of a thorough review of the client's asset resources and as part of a financial strategy based on rigorous cost/benefit analysis, including tax consequences. Still, for clients at any age or life stage, knowledge of viatical options should be part of their fundamental financial perspective.
ACCESSION #
1877465

 

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