Two powerful ways to unlock hidden value in life insurance—it's important to understand the difference.
| Life Settlement | Viatical Settlement | |
|---|---|---|
Who Qualifies | Seniors (typically age 65+) with unwanted or unneeded policies | Individuals diagnosed with a terminal or chronic illness |
Health Requirement | No terminal illness required | Must have a life expectancy usually under 24 months |
Payout Range | 4x–12x more than cash surrender value | Often higher payout due to shorter life expectancy |
Use of Proceeds | Retirement, long-term care, other financial needs, other | Medical bills, living costs, quality of life during illness |
Tax Implications | May be taxable depending on gain | May be tax-free if proceeds used for medical or end-of-life care |
Regulation | Regulated in most states with consumer protections | Also regulated, often with additional oversight for health status |
Ownership Transfer | Policy sold to investor, who takes over premiums & benefits | Same structure—buyer becomes beneficiary and manages the policy |
Emotional Considerations | Often a strategic financial move | Often a last resort financial lifeline |
Common Policy Types | Universal life, whole life, convertible term | Any type, as long as value and timeline are appropriate |