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Sale Of A Life Insurance Policy (Viatical, Life And Senior Settlements)

History Of Selling Life Insurance Policies By Owners

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The viatical settlement industry began in the late 1980’s in order to provide people living with HIV/AIDS a means of obtaining money to finance medical treatments and other expenses not covered by insurance, to provide security, or fulfill postponed plans and dreams.

The first purchaser gave an owner/insured an amount of money which was determined by taking an educated guess at the insured’s life expectancy, and then applying a factor to it which would provide the purchaser a high rate of interest to reflect the risk and to give the purchaser a profit. When the insured died, the purchaser received 100% of the death benefit.

The industry has since evolved to include all life challenging illnesses, but the financial model has remained the same.

The industry now also purchases life insurance policies based on the insured’s age. This is known as a “life settlement” or “senior settlement,” and is generally not an option unless you are age 65 or above.

Due to early abuses, in most states, the industry is regulated and purchasers must be licensed.

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