Brokers and providers will now be required to be licensed by the state in order to engage in the business of viatical settlements.
Viatical settlement brokers, acting as fiduciaries for the ill or aging "viators," shop the life insurance policies to viatical settlement providers, who then collect and pool the policies for the purpose of selling them to investors.
The viatical settlements market, now referred to as the life settlements market, has evolved since the 1980s when it served terminally ill persons, most notably AIDS patients. The market allowed these insureds to raise immediate cash by selling the future proceeds of a life insurance policy for a lump sum of money.
Today, companies like Coventry First LLC of Fort Washington, Pa., do not limit life settlements to the terminally or chronically ill. The practice has grown increasingly popular among the elderly who no longer need or can no longer afford their current life insurance policies.
"With a viatical or life settlement, seniors can access and use their life insurance policies proactively as a new source of wealth," says Doug Head, executive director of the Viatical and Life Settlements Association of America, Orlando, Fla.
Reproduced from National Underwriter Life & Health/Financial Services Edition, July 29, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
