People who are diagnosed with serious illnesses often face terrible financial difficulties. Medical bills mount up, even for those with health insurance; for those without, medical expenses can be catastrophic. The financial picture is worsened when ill health forces a person to work less or not at all.

While these problems are as old as money itself, viatical settlements are a relatively new development in response to them. They first came to widespread notice in the 1980s, as a result of the rapid rise of HIV and AIDS.

In June 1981, AIDS cases were reported in America for the first time. By 1987, over 50,000 people had been diagnosed as HIV-positive. The people in this group were disproportionately relatively young men—92% male, 87.9% between the ages of 20 and 50. These statistics reflect the epidemiological nature of the disease, which in those years, was mostly transferred by homosexual contact between men. (Center for Disease Control, “HIV and AIDS—United States, 1981-2000”, http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5021a2.htm)

The gay, young to middle-aged men who constituted the vast majority of AIDS’ early victims had several things in common as a group. Most did not have children or spouses, and therefore did not have to worry about the welfare of children or a spouse after their death. And because of their age, most were in the prime of their working lives—so they depended on earned income, and did not have retirement money to draw on to pay their medical expenses.

For those men who had life insurance, then, selling their policy was an expedient way to meet their financial needs. The availability of sellers prompted the development of a fledgling viatical industry. In 1989, there were three investment companies specializing in viatical settlements.

Today, there are fifty, and it is a billion-dollar industry. In addition, the market is expanding to include “life settlements.” The term is often used interchangeably with “viatical settlements”, but differs in that it sometimes refers specifically to the sale of life insurance policies by generally-healthy senior citizens. As the industry continues to evolve and become more well-known, it will doubtless continue its growth.

Found this interesting definition about life settlements, it is not that accurate.

Life settlements, also called viatical settlements, are arrangements that allow a person to buy the life insurance policy of someone who is terminally ill. Life settlements are not sold for the full value of the life insurance policies in question, but for a percentage of the value of the policy that is agreed upon by the owner of the policy and the person who is buying the policy.

One reason people may be interested in life settlements is if they are dying of a particularly expensive disease, and would rather pay their bills now than leave a huge debt for their beneficiaries to pay. With life settlements, you get a piece of the financial pie now rather than leaving the whole pie to your beneficiaries to be cut up and divided after your death.

As if the whole concept of life settlements were not already grisly enough, there are life settlements brokers who are third parties who arrange the sale of life insurance policies between a terminally ill patient and the person who wants to purchase a life insurance policy.

As you can see above, his statements are not accurate. If you have any questions regarding your life settlement situation, please call us toll free at 1-888-973-8377 or email us.