The Reinvestment Benefits of Viatical Settlement

Viatical settlement has become a popular strategy for investors seeking immediate liquidity for end-of-life expenses. Distinct from other derivative products, viatical settlement also offers life insurance policy holders immediate cash for reinvestment without the extenuating contract obligations of other financial assets. Settlement transfers the title of a life insurance policy to a new buyer in exchange for a lump sum cash payment. Eligible insured can also avoid the hassle of collateral borrowing against the limit on a life insurance policy with viatical settlement, which affords an investor immediate cash in exchange for the full value of the policy.    

Eligibility Requirements for Settlement

Life insurance policy holders in New York are eligible for life settlement depending on the terms and conditions of an agreement. An eligible policy can provide an investor with additional cash to offset finance medical or other important expenses. The seller and buyer must agree to any modification of a policy’s terms and conditions, such as obligation to premium payments assumed at time of origination. The full value of a life insurance policy must be determined prior to settlement. Distribution to named beneficiaries of a policy, or other condition to the sale of the policy value should be articulated before transfer.      Unlike other key investments such as real estate, a life insurance policy settlement is a fast and efficient process for enhancing retirement liquidity.


Brokering a Viatical Settlement

Third-party institutional investment groups working with insurance brokerages, negotiate to purchase life insurance policies through viatical settlement.  A life holder can market their policy through an insurance brokerage company, letting institutional investors know they are interested in settlement. Brokers are guided by New York insurance legislation under Section 7814 (5) Prohibited Practices, defining procedure “with respect to any life settlement contract, knowingly fail to disclose any affiliation or contractual arrangement.’” A New York licensed attorney at law can advise a client in the transfer of a life insurance policy asset in a viatical settlement performed by a broker.  

Protect Valuable Estate Assets

Whether planning for retirement, or an estate to protect assets for future generations, the possibility of viatical settlement is an effective solution for individual investors interested in absolving heirs and beneficiaries from obligation to outstanding debt obligations to avoid creditor attachment of an estate or trust. Protect estate assets from probate liquidation with a viatical settlement.  

Life Settlement Laws

New York law allows for viatical settlement of a life insurance policy. New York Consolidated Laws, Insurance Laws, Article 78, Life Settlements provide the rules to viatical settlement within the state. The New York Life Settlements Act of 2009, which went into effect May 10, 2010 repealed the state’s existing Article 78 governing viatical settlements in a reform measure of licensing requirements for life settlement providers, brokers, and other intermediaries. For information about how to transfer estate title of a life insurance policy in a viatical settlement in New York, contact an estate law attorney.


Estate Law Firm NY

Ettinger Law Firm is a licensed New York attorney practice specializing in financial planning and estate probate litigation. Contact Ettinger Law Firm to schedule a consultation about an estate law related matter.     

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