Life Insurance Settelments
Life insurance settlements is the process where owners of life insurance policies can sell their life insurance policy to a third party. That third party is typically an investment company, and the services are provided through a life settlements broker.
| Life Insurance Settelments | Viaticals | Accelerated Death Benefits | |
| Definition | A third party purchases the rights to a life insurance policy. In exchange the policy owner receives a percentage of the death benefit prior to the death of the insured. | This is the same as a life insurance settelment except that the life insured has an expected mortality of less than two years. | A possible alternative to life insurance settlements, some insurance companies will provide an advance on death benefits if the insured is deathly sick. |
| Offered by | Life insurance settelment companies, typically via a life settlements broker. | Life insurance settlement companies, typically via a life settlements broker | The life insurance company that offers the life insurance policy. |
| Medical Underwriting required? | Yes | Yes | Yes |
| Pros | Cash for an unwanted or no longer needed life insurance. | Cash prior to death for an insurance policy. | Cash prior to death. Insurance policy is not transferred to someone else, remainder of the death benefit is paid to beneficiaries upon the insured's death. |
| Cons | Beneficiaries and policy owner lose all further rights to the insurance policy. | Beneficiaries and policy owner lose all further rights to the insurance policy. Policy owner may not recieve full market value for the policy if they shop under duress. | May recieve less of an initial payment than a life insurance settlement might provide |