A viatical settlement is the sale of a life insurance policy by someone with a terminal or chronic illness. A licensed buyer pays cash now. In return, the buyer takes over the premiums and collects the death benefit later.
The money comes with no conditions. Sellers use it for treatment, care, family, or nothing at all.
Windsor is a fiduciary. Windsor represents the policyowner, never the buyer, and takes each policy to multiple licensed buyers so they compete for it.
How a viatical settlement works.
Windsor reviews the policy first: face amount, premiums, and status. Independent medical underwriters review health records and estimate life expectancy. Together, those set the policy’s market value.
Windsor then sends the case to licensed institutional buyers. Buyers make offers. Windsor negotiates. The policyowner decides.
After an offer is accepted, ownership moves to the buyer and funds release through a licensed escrow agent. Most cases close two to six weeks after paperwork is complete.
See the full viatical settlement process.
Who qualifies for a viatical settlement?
Two things decide it: the diagnosis and the policy.
The diagnosis is usually a terminal illness with a life expectancy of 24 months or less, or a chronic illness that requires long-term care or help with daily living.
Whole life and universal life policies qualify most easily. Convertible term policies can qualify. Higher face amounts and lower premiums draw more buyers. A lapsed policy, or one with a loan against it, may still qualify.
Review viatical settlement eligibility.
Viatical settlement vs. life settlement.
The transaction is the same. The seller is different.
A viatical settlement involves an insured with a terminal or chronic illness, usually with two years or less to live. A life settlement involves an insured who is typically 65 or older, without a terminal diagnosis.
Two differences follow. Viatical proceeds are generally tax-free for the terminally ill, while life settlement proceeds may be taxed. And a shorter life expectancy usually brings higher offers, because the buyer pays premiums for less time.
What a viatical policy is worth.
Value depends on health, face amount, premiums, and the market on the day the case goes out. In Windsor’s experience, viatical settlements often return between fifty and eighty percent of the policy’s face value. The exact number comes from buyers bidding on the file.
One buyer offers one price. Several buyers bidding against each other set the real one.
Estimate a value with the viatical settlement calculator.
Are viatical settlements taxable?
Under federal tax law, proceeds are generally tax-free for an insured certified as terminally ill. Chronic illness can qualify when the money goes to qualified long-term care costs. State rules vary.
Windsor is not a tax advisor. A CPA or tax attorney should review each case before closing.
Read more on viatical settlement taxes.
Viatical settlement vs. accelerated death benefit.
Many policies include an accelerated death benefit. The insurer advances part of the death benefit early. The amount is usually limited and set by the insurer.
A viatical settlement pays market value from outside buyers, and the premium bill moves to the buyer. Both options deserve a look before choosing.
Compare the accelerated death benefit with a viatical settlement.
Who works for the seller.
Providers buy policies. Providers do not owe the seller a fiduciary duty. Some companies that advertise to sellers are owned by the same buyers they claim to compare.
A viatical settlement broker is a fiduciary and works only for the policyowner. Windsor brings competition to a process that rarely has it.
Learn what a viatical settlement broker does.
Regulation and consumer protection.
State insurance departments regulate viatical settlements. Brokers and providers are licensed. Sellers get written disclosures before signing and a set period to cancel after closing.
Common questions.
Does the insured lose the coverage?
Yes. The buyer becomes the owner and beneficiary and pays all remaining premiums.
How long does a viatical settlement take?
Usually two to six weeks after medical and policy records arrive.
Can family members be involved?
Yes. Windsor encourages it.
Who buys these policies?
Licensed institutional investors that hold life insurance as a long-term asset.
Start with a policy review.
A confidential review comes first, with no obligation. The policyowner learns what the policy could bring and whether selling makes sense.
