  a viatical settlement (from the latin "viaticum")entry for "viatical settlement" at merriam-webster on-line dictionary, retrieved november 12, 2012, at http://www.merriam-webster.com/dictionary/viatical settlement is the sale of a policy owner's existing life insurance policy to a third party for more than its cash surrender value, but less than its net death benefit.what is a life settlement?, life insurance settlement association, retrieved march 4, 2012, at http://www.lisa.org/content/13/what-is-a-life-settlement.aspx such a sale provides the policy owner with a lump sum.life settlement history, life insurance settlement association, retrieved march 4, 2012, at http://www.lisa.org/content/51/life-settlement-history.aspx the third party becomes the new owner of the policy, pays the monthly premiums, and receives the full benefit of the policy when the insured dies. "viatical settlement" typically is the term used for a settlement involving an insured who is terminally or chronically ill. a person generally is chronically ill if the person (1) is unable to perform at least two activities of daily living, such as eating, using the toilet, bathing oneself, or dressing oneself; (2) requires substantial supervision to protect himself or herself from threats to health and safety due to severe cognitive impairment; or (3) has a level of disability similar to that described in (1) as determined by the u.s. secretary of health and human services. a person generally is terminally ill if the person has an illness or sickness that can reasonably be expected to result in death within two years. as medical advancements improved the lives of those persons living with terminal or chronic illnesses, the life settlement industry emerged. from the perspective of the investor, purchasing a viatical is similar to buying a zero coupon bond with an uncertain maturity date[however an annual maintenance fee is payable i.e. the policy premium]. the return depends on the seller's life expectancy and when he or she dies. ==history== viatical settlements grew in popularity in the united states in the late 1980s, when the aids epidemic peaked. the early victims of aids in the u.s. were largely gay men, many of whom were not particularly old. they often had no wives or children (the traditional beneficiaries under a life insurance policy), but they had life insurance policies through employment or as a result of investments. the beneficiaries under the policies were often their parents who did not need the money. viatical settlements offered a way to extract value from the policy while the policy owner was still alive. at the time, the aids mortality rate was very high, and life expectancy after diagnosis was typically short. investors were reasonably sure th
Insurance Insurance_in_the_United_States