That's why I think we need legislation to protect consumers now. Viatical deals first came into existence in the 1980s as the number of AIDS cases increased. By selling a policy for a percentage of its face value, the insured can get cash for medical expenses, travel, investments or gifts to the children now rather than later. The tradeoff is giving up a bigger payoff at death for one's beneficiaries. On the other side of the transaction, viatical settlement providers, like Justus, buy the policies and then arrange for investors to fund the purchase, pay the premiums and become the beneficiaries.
Investors make money unless the original insured's death comes significantly later than anticipated.
But if the patient lives two years, the return falls to five percent. Because deception can occur, Nelson's legislative proposal requires life expectancy certificates to be issued by a qualified professional. It also would require fuller disclosure in advertisements and ban insurance agents whose licenses have been suspended or revoked from turning around and working for a viatical company. In recent years, the viatical business has grown steadily in Florida. As of the end of last October, there were 90 licensed brokers in Florida.