There is a financial tool, designed in the late 80's, that provides an innovative solution to the financial burden of people with Cancer, or other catastrophic illnesses. Available to people who own life insurance either through work or who purchase it privately, a viatical settlement allows an individual with a catastrophic illness such as cancer to immediately access a significant portion of the face value of their life insurance policy. Like selling a car, once the settlement has been made, the insured no longer needs to carry the burden of their premium obligation, yet receives the immediate benefit of the life insurance proceeds. Settlement amounts vary based upon many variables. Basically, the insured is receiving the future value of their life insurance policy discounted to today's dollars.
Prognosis is the key.
The longer the life expectancy of the insured, the lower the settlement amount. For those people plagued with the burden of debt, it is often a simple, yet effective solution to remove this burden and provide the necessary funds to meet future financial obligations as they arise. The trade-off, or so it appears, is that the future benefit is given up in return for a lesser immediate benefit. Indeed, in most cases, the opposite is true. The value of the settlement, more often than not, exceeds the future value of the life insurance benefit.