Although viatical settlements have been available for a long time, it was not until the AIDS epidemic of the late 1980's that viatication became more common.
The qualifications for a life settlement will differ far more dramatically from individual to individual than with viatical settlements, primarily because health condition, an essential element to a viatication, is not necessarily a critical factor in a life settlement.
If the advertiser emphasizes the speed with which the viatication
will occur, the advertising shall disclose the average time from the date of the completed application to the date of offer and from acceptance of the offer to receipt of the funds by the viator.
A sale of the policy avoids the three-year rule because the viatication
is a sale for fair market value in money or money's worth.
The patients' increased life expectancies eliminated the profits on viatication
of policies with small face values.
(Strictly speaking, this FASB staff position applies only to acquiring life insurance policies by viatication
, not to acquiring COLI policies in business combinations.) For both situations, purchase accounting presupposes an exchange of consideration of equal value.
Table 4 shows our unadjusted estimate of the effect of price floors on the likelihood of viatication. Of the 1,009 respondents in our sample, 123 (12 percent) reported residing in states with minimum price regulation and the remaining 886 respondents resided in states with no price regulation in the baseline HCSUS survey.
(11) In contrast, there were no differences in the viatication hazards across regulated and unregulated states for respondents with life expectancy <4.5 years (hazard ratio 0.94, standard error 0.20).
Finally, some employer-sponsored group life policies can be viaticated, although this option is not often disclosed to employees in their benefits manuals.(15) The availability of viatication
as an option to terminally ill group life policy holders will depend upon restrictions built into the policy, such as assignability and contestability clauses.
Though the concept of viatication
may sound ghoulish, the business of viatical settlements is generally legal and provides a service to terminally-ill patients.(7) The purchase price for the policies enables the policyholders to realize some estimation of the policies' present value, to use for their living and medical expenses.
Because licensed life insurance agents already are trained and certified to be able to assist policyholders with the exercise of the assignment clause of their policies (the action required of a person assisting a consumer with a viatication
), both the "A" Committee and the Plenary overwhelmingly rejected the extra licensing concept as duplicative, unnecessary and protectionist.
Senior citizens who own whole or universal life insurance policies and are expected to die in less than a year may be able to turn to two related financial strategies: living benefits (LB) and viatication
. Under LB, a life insurance policy that contains an accelerated benefit rider can be accessed during lifetime with part of the death benefit paid out to the insured.