Perhaps not well known in America today is the fact that most modern life insurance policies, with the exception of some straight term policies, offer some kind of investment or cash-accumulating component. Guaranteed value riders, loan riders, and other attachments to modern policies provide for access to cash from the policy, even without an actual death of the insured occurring. In the unfortunate scenario of a diagnosis of terminal illness, the insured can gain access to his or her funds when most critically needed, whether to pay for unexpected medical expenses, or to compensate for the loss of income. A company that provides access to this untapped reserve of cash for the insured is known as a viatical settlement company.

A viatical settlement company can take on several forms. It cannot, however, be the actual insurance company that issued the policy, a savings bank, credit union, or any other licensed lending institution. Viatical settlements cannot occur between private parties, such as a close friend or relative. They cannot take on the form of a loan against the value of the policy by the issuing insurance company. The viatical settlement company is an outside, third party, that functions as a “for profit company”. As a general business model, the viatical settlement company will provide a cash settlement, possibly a lump sum or series of payments, or other forms of compensation before the death of the insured actually occurs. In exchange for this service, the insured will, in most cases, be required to “sign over” their policy to the company providing the funds, in essence making them the owner and beneficiary of the policy. There are, however, a great deal of rules and regulations that must be adhered to in order to facilitate this transfer of policy ownership.

As a rule, all viatical settlements are required to be approved by the insurance commissioner of the state in which the transaction is to occur. Strict regulations state that the insured be given a grace period in which to change their mind, or make new arrangements. Also, there is a registration fee for the viatical settlement company, which must be renewed annually. Anyone ever convicted of fraud or any type of criminal activity are expressly prohibited from working for one of these companies. For more information on these and other insurance programs, check online at InsuranceQuotes.org, or any other trusted site to learn more information.