The Viatical market place is changing again. To meet the growing demand from investors, finance and marketing companies have had to expand their purchasing criteria. In addition to purchasing policies for terminally ill patients, they also court insureds with relatively low illnesses and, in some cases, fully healthy policyholders from a certain age with larger insurance policies. Case 7: Non-profit donation – with the proceeds of viatic billing to fund a CLAT. A viatic company`s sales equipment compares that “our viatic billing pays you up to 80% of the death allowance, while an ADB driver pays up to 25%.” First, it is never appropriate to compare the maximum possible gain for one planning technique with the minimum payment for another. Moreover, this statement ignores the awareness that, for an ADB driver, any percentage that is not paid in his lifetime is paid to the beneficiaries in the event of death, but with a viatic settlement, it is rather a benefit to investors. In the example above, if the policy is due before the fourth annual payment is due; it is the supplier that effectively keeps the premium unused. Conversely, if the insured survived for more than four years, the directors agreed with the claimant to make available to the directors all the additional bonuses due. Some companies claim that an ADB driver takes much longer than viatic billing to pay for benefits. In fact, it is the opposite, and insurance companies are generally quicker to pay these claims than a viatic business. Despite the poor experiences of some investors, viatic comparisons remain an often valuable tool for the personal financial management of many sick people. A 2002 study showed that among palliative care counsellors who have experienced viatic implantations, most positive experiences are made. Many seniors hold a significant percentage of their savings in IRA accounts and have been targeted by many of the most aggressive viatic companies. The IRS is very clear on this issue. It is a no-go transaction to buy life insurance with IRA funds. The penalty is the loss of the plan`s tax-exempt status, making income tax on the entire account payable in the year the insurance is acquired. Myth #10: The SEC has authorized viatic implantations. The purchaser of a viatic settlement pays the seller a lump sum payment in cash and pays all future premiums that remain in life insurance. The buyer becomes the sole beneficiary and cashes the entire policy if the original owner dies. Investing in viatic billing carries many inherent risks, almost none of which is ever disclosed to the individual investor. For example, Ms. Doe invested all of her $250,000 in life savings in a viatic housing fund and was promised a guaranteed return of 15%.
She received a health bulletin for the policyholders whose policy she had purchased, but she had to have confidence that the insurer that wrote the report gave her an accurate estimate of the insured`s life expectancy. She had been told that the insured would live for 12 months, but now, two years later, she still has to see that her investment is paying off. She decided that she had to withdraw some of her funds, but was informed that she could not do so without losing almost all of the penalty investment. Just as she was starting to panic that she had lost her money, she received an invoice for an additional investment needed to pay the insurance premium for the policy she had purchased. When a life insurance taker is considering life insurance, they should first consider all available options to get the money they need.