After a certain period paying off your insurance premiums can seem like a stretched expense. While some continue on the path, thinking there isn’t any alternative, others take the smarter route and go for a life insurance settlement. Once you begin the process of settlement you’ll learn that there are two ways you can settle your life insurance policy. The first one is a much simpler process where you pass all your eligibility criteria. Following which you receive approval for a lump sum amount of your insurance, the second process invoices soothing called a viatical settlement.
An understanding of both these processes is of utmost necessity when the day comes. Let’s throw some light upon both of these processes and then you can decide which way you want to go.
What is a General Settlement Procedure?
Let’s start first with the simple process that many of us take. This is a general settlement procedure involving you contacting a life settlement company and dealing with them. The company will start by interpreting your insurance value. There are also some eligibility criteria that you must adhere to, these include:
- The valuation of your insurance policy to be at least $100,000 and above.
- Your age to be above 65 years.
The company also checks the history of your insurance, if there are any pending dues, and more. Once you are found eligible, based on multiple facets, you get a valuation. At the end of the day, you can recover anywhere between 20-25% to 50% of your life insurance value. If you are in a haste, this is not a process you can follow. Only to clear your paperwork and set you up ok the right track can take at least a couple of weeks. After which, you wait for another 3-4 weeks before you can see any money in your bank.
Viatical Settlement: Meaning and Definition
The second process is a viatical settlement. Viatical settlements are much faster, used by people who are chronically ill and learning death. From not being able to eat to walk, bathing, and more, if a person is unable to perform due to their illnesses and has a life expectancy of not more than 2 years they are declared terminally ill. This allows them to surpass any eligibility criteria and sell their life insurance policy in an instant. The settlement company helps the policyholder with a lump sum amount and gains full control over the personas policy. Upon their death, the settlement company receives all the benefits of the policy.
A viatical settlement is a go-to choice for anyone who falls in the category of a terminal illness. In fact, it is because of this process that life insurance settlement came into play. Now, it’s upon you to decide.
The Final Word
Don’t confuse yourself. If a family member, friend, or someone close to you is planning to settle their policy, check to see if a viatical settlement. If that’s the case, they will be able to get instant monetary benefits from any of the government recognized settlement corporations.