Paying for Medical Care
Selling your life insurance policy to pay for medical needs is specifically for individuals suffering from a terminal illness. The transaction can typically be done tax-free, so long as the insured meets certain criteria as stated by a medical professional.
How Does This Option Differ From Normal Life Insurance Purchases?
At its core, it is essentially the same as other life options; with the major caveat being the insured is typically suffering from a terminal illness and has a life expectancy of less than two years.
There are some other slight variations between the two. Below, you can see a comparison of the types.
- The insured is terminally/chronically ill.
- The proceeds typically range from 50% to 80% of the death benefit.
- The IRS allows proceeds to be received as a tax-free gain so long as the insured meets certain criteria as stated by a medical professional.
- The insured is typically a senior in their late 70s.
- The proceeds are usually around 10% to 80% of the death benefit, depending on life expectancy.
- The funds are normally subject to taxation unless they meet IRS guidelines.
When Is The Right Time To Pursue A Viatical Option?
For many individuals facing a terminal illness, a viatical sale can be a strong financial solution. Patients and their families can receive funds to pay for medical care or quality of life experiences. We commonly see clients use their funds to tackle their “bucket-lists.” Many insured want to be able to see their family enjoy their life insurance money now, rather than not being present to share in their happiness.
Coping with a medical crisis while still worrying about medical bills works against the goals of palliative care and hospice. With the cost of healthcare continuing to rise, even those with excellent health insurance are struggling to keep up with medical expenses. Viatical settlements can provide an inflow of funds which can be used to pay off bills or fund experimental/alternative treatments that may not be covered under insurance.
If you are struggling with medical bills, having an issue keeping up with your premiums, or just want immediate income, a viatical settlement could be right for you. We at Abacus advise that anyone considering a settlement take a close look at their life insurance and financial situation to make sure they are making the correct choice for them and their family. If you do not have an immediate need for a lump sum of cash, we suggest not seeking a life settlement as realistically, the greatest payout you can receive is the death benefit.
In contrast, if you are considering letting your policy lapse or surrendering it, contact us first. Abacus wants to help you get the most out of your policy.
Over the past decade, the market has become incredibly well regulated. The entire insurance market is regulated on a state-by-state basis instead of nationally. Therefore, the responsibility falls on each state’s government to make sure that companies are behaving ethically. The majority of states do require specific licensing and practice strict oversight to ensure customer safety. Here at Abacus, we are proud to share that we are licensed for life and viatical settlements in many different states.
Whoever you choose to work with, you should make sure they follow the correct guidelines; there are still some companies in the industry who do not operate under the appropriate licensure.
Diane was diagnosed with stage IV cancer. Realizing the immediate need for financial assistance to pay for treatment, Abacus was able to close the case in exactly 30 days. Diane received a lump sum of $201,000 and was able to secure important medical care right away.
The First Step
If you’re interested in learning more about your life insurance options with Abacus, we encourage you to pre-qualify your life insurance policy using our confidential Online Qualification Tool. If you prefer to speak with one of our representatives, call us at 1-(800) 561-4148.