Investment vehicles for viatical settlement syndication consist of pooling a series of high-premium term and/or ordinary life policies issued on the lives of persons who have been diagnosed with HIV/AIDS or other life threatening illnesses.
Currently, 39 states and Puerto Rico regulate life settlements, and the National Association of Insurance Commissioners (NAIC) recognizes them as a viable solution (NAIC, "NAIC Adopts Viatical Settlements Model Act Revisions," News Release (June 4, 2007), www.
Accordingly, (Insurer), effective with applications dated March 7 and later will require that financial professionals certify on the life insurance application that they or their client has no intent to use this policy for any type of viatical settlement, senior settlement or any other secondary market.
Because of the need to protect insureds and to create a transparent and fair viatical settlements market, the National Association of Insurance Commissioners developed the Viatical Settlements Model Act in 1993 as well as accompanying rules to guide states in their regulation of the viatical settlements industry.
Accordingly, the type of individual who would most benefit from taking an accelerated benefit or a viatical settlement is a financially independent person without a financially dependent spouse or children who is unable to work and who has no long-term care or disability insurance.
A viatical settlement is a contract that allows an individual with a relatively short life expectancy to sell a life insurance policy for cash to a third party - an individual or business entity - at a discounted value of the policy's face value.