Considerations Before Viaticating
- Will the beneficiary for the policy need that money when you?re gone? For example, if you are the primary breadwinner in the family with a spouse who is employed part-time or not at all, chances are he or she will need that money to stay afloat. On the other hand, if your beneficiary is a spouse or grown son or daughter who is financially self-sufficient, the policy benefits may not be as crucial.
- Have you explored other ways to obtain financial benefits from your life insurance policy? You can call your state Insurance Commissioner or your insurance company?s claims department to find out about alternatives. For instance, you might look into accelerated death benefits, sometimes called "living benefits," whereby some insurance companies will pay out a percentage of the death benefit early under special circumstances. Other possibilities might include borrowing against the cash value of the policy or borrowing from friends and family using the policy as collateral.
- If you sell your policy, will you have to pay taxes on the settlement? This may vary according to your life expectancy and the state where you live.
- Will a viatical settlement affect your eligibility for public assistance programs based on financial need, such as Medicaid?
These and other issues are addressed in a publication called "Every Question You Need to Ask Before Selling Your Insurance Policy" by National Viator Representatives, a New York-based broker that represents individual policyholders who wish to viaticate. Newly updated for 1999, it addresses a full range of options that people might consider first. (By pointing readers to this resource, OncoLink does not intend to endorse the services of National Viator Representatives.)