Watch Out! Viatical ahead!

If someone waves a viatical contract at you, run for help

Bob thought he was doing a clever thing when he invested $50,000 in a viatical contract. He was told he would be making a humanitarian investment by purchasing the life insurance policy of a terminally ill person and that he could expect a large profit for himself.

Can you say scam?

But the insured person wasn't really sick at all and Bob ended up paying the policy premiums to avoid losing his investment. Bob became a frequent flier at Payday Loans in order to meet the premium paydays.

What is a Viatical?

A viatical insurance settlement is an agreement in which a third party buys a life insurance policy from an insured person and thus becomes the legal beneficiary of the policy. The insured person receives an immediate cash payout and in most cases the buyer of the policy agrees to continue to pay the premium on the life insurance policy until the death of the insured.

How Viaticals Are Supposed to Work

When you buy a viatical, you purchase the life insurance policy of a terminally ill person at a discounted price from a viatical broker who takes a commission. The ill person gets a chunk of money to help pay expenses or take a cruise and the investor gets the full face value of the policy when the person dies. Brokers also sell a spin-off of viatical settlements, called life or senior settlements, in which the investor is offered the life insurance policy of an older, healthy person.

Helping others?

The investors are told they are helping older people stay financially secure in their golden years. The pitch is based on a high rate of return—often 20 to 40 percent—and a humanitarian opportunity to help a sick person, a combination appealing to older investors. ... click here to read the rest of the article titled "Watch Out! Viatical ahead!"