Finding adequate funding to cover the cost of treating and living with cancer is difficult. There are a few options that many people are not aware of, such as finding financial assistance for cancer patients through the use of viaticals and life settlements. Doing this is something that may become necessary should insurance not cover all of the associate costs of care and treatment and the loss of income from being ill prevent other funding options. It should not be done unless absolutely necessary as viaticals and life settlements can only be used once.
What are life settlements and viaticals?
A life settlement is when a person sells their life insurance policy to a third party as they need funds, they do not have to have a terminal diagnosis. It is different from a viatical. A viatical is created when a person with a terminal condition sells their life insurance policy to a third party for an agreed upon cash amount. They first became popular during the later stages of the AIDS epidemic as many persons with AIDS lacked the insurance necessary to provide end-of-life treatment. Now, with the rise of terminal cancer diagnosis, they are becoming more mainstream. In general a viatical is considered when the life expectancy of the viator (the person named in the policy) is less than six months. The sale can be enormously helpful in covering cost as most hospices will not accept patients until they are in the last 3 months of their life.
How it is done
Once the life expectancy is listed by a doctor as officially less than 6 months, a viatical sale can be legally done. The usual sale amount ranges between 30 and 80% of the face value of the policy; how much is paid into the policy is the general determiner. The third party then continues to pay on the policy until the death of the viator occurs, at which point they collect the death benefit of the policy. With a life settlement, there is no qualifier of a terminal illness and they can be sold at any time.
Why would you choose a viatical or life settlement?
There are pluses and minuses to choosing a life settlement or viatical. Some of the most common reasons given are:
- To provide for uncovered costs for food, shelter and care.
- To allow for tax free gifts to heirs rather than to subject funds to estate tax.
- To take a final trip.
- To make final arrangements.
For many people, the benefits outweigh the loss in the moment.