Life insurance is a popular policy investment sold by various insurance companies. In order to safeguard personal interests and those of the family, a large number of people opt to purchase a life insurance. In due course of time, if a policyholder is diagnosed with a terminal illness, the insurance company is legally bound to recompense the person. In case of an incurable ailment, policyholders need to spend on expensive medical treatment, to ensure comfort for the remaining years of their life. These medical expenses can be huge and policyholders may choose to cash in, on their life insurance. This is termed as a 'viatical' settlement and a number of investors are willing to pay for them.
In this agreement, a terminally ill policyholder sells his life insurance at a discounted rate. This settlement provides ready cash and is a legal exchange. People opt for such settlements as they eliminate the risk of handing over personal assets for cash. In such an exchange, policyholders need to name the investors as beneficiaries in case of death. They cash in on such investments, when the person dies. The investors are only concerned with their profitability or return on investments and this depends upon the life expectancy of the policyholder.
The rate of return is unpredictable and in case of longer life expectancy, returns are lower. A number of people choose cash for life insurance settlements. This is logical, as risking other assets for cash jeopardizes the situation of the surviving family members. The need for cash is optimum when diagnosed with a terminal illness. Money is needed for treatment that can help slow or partially control the spread of the disease. Investors examine medical records, diagnosis and prognosis to confirm the seriousness of the illness before providing cash for life insurance settlements.
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