VIATICAL SETTLEMENT Meaning and
Definition
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A viatical settlement refers to a financial arrangement wherein a terminally ill person sells their life insurance policy to a third party for a lump sum, typically at a discount from the face value of the policy. This transaction allows the policyholder to access a portion of their death benefit while they are still alive, providing them with immediate funds that can be used for medical expenses or other financial needs. The purchaser of the policy, known as the viatical settlement provider, assumes the responsibility of paying the policy premiums until the insured's death, at which point they collect the full death benefit.
Viatical settlements are often sought by individuals facing a terminal illness who have significant financial obligations or require access to immediate funds beyond what their current assets can provide. By selling their life insurance policy, they can convert a future benefit into present cash, providing financial relief and peace of mind during their final months.
This type of arrangement is governed by various legal regulations, which typically require the involvement of licensed viatical settlement providers or brokers to ensure fair and ethical practices. Viatical settlements can be a beneficial option for terminally ill individuals seeking to maximize their financial resources and maintain control over their financial future.
Common Misspellings for VIATICAL SETTLEMENT
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Etymology of VIATICAL SETTLEMENT
The word "viatical" comes from the Latin word "viaticus", which means "of or pertaining to a journey". It is derived from the Latin word "via", meaning "way" or "road". In ancient Rome, viaticum referred to provisions or money given to travelers for their journey.
The term "settlement" in "viatical settlement" refers to the act of settling or resolving a financial agreement. In this context, it refers to the sale of a life insurance policy by a terminally ill or chronically ill policyholder to a third party, usually at a discounted rate. The term "viatical settlement" originated in the United States in the late 1980s when this practice became more prominent. Viatical settlements provided individuals with an opportunity to access their life insurance benefits before their death, offering financial relief for medical expenses or improving quality of life during their remaining days.
