Life insurance is one of the hardest financial topics to broach. Even though it’s called life insurance, it’s actually there to provide a death benefit, and death is something that we have a natural and understandable knee-jerk flinching reaction to. However, the fact of the matter is that, as surely as you’re reading this article, one day your time in this world will come to an end. Life insurance policies are the best way to ensure your family has the funds for your burial with something left over to help them stay afloat financially in your absence.
While a life insurance policy is there to provide a death benefit, it can also help you a great deal while you’re still in the realm of the living. Many people treat their policy as an investment tool that can be used in the here and now. Viatical settlements and life settlements are two of the ways you have to turn your policy into cash that you can use right now to sustain you during financial hardship. Continue reading to learn the difference between life and viatical settlements and how they differ from each other.
You can use a life settlement however you choose.
Having a life insurance policy to take care of your beneficiaries when you pass should be a financial goal for every adult. However, being that you can get a life settlement at any time for any reason, you should look at your policy as an investment instead of merely an eventual death benefit for your beneficiaries.
One of the most common reasons for people to apply for a life settlement is to buy real estate or make a down payment on a piece of property. If you’ve been searching for Atlanta condos for sale and everything is out of your budget, you can use your insurance policy to purchase your home.
It’s no secret that condos in the heart of Buckhead and downtown Atlanta are at a premium, meaning they’re in high demand and expensive. Furthermore, you need to take into account that if your credit isn’t up to par, you may not even be able to get a loan for the amount you need. The good news for life insurance policyholders is that your insurance company is a financial institution that you can go to any time to cash out your policy and use the policy’s death benefit to purchase your Midtown Atlanta condo. The cash value of your policy will probably be more than you have in your savings account or the number that you came up with on your online savings goal calculator.
Viatical settlements are for people with a chronic illness and shortened life expectancy.
The qualifications for getting a viatical settlement are quite different than what it takes to get a life settlement. To get a viatical settlement, you have to have a life expectancy of 24 months or less. That’s why viaticals are often called last-resort settlements. Viatical settlement providers decide the cash value of the policy depending on the amount of the policy and the policyholder’s life expectancy.
When someone is diagnosed with a terminal or chronic illness, they usually have no idea of the financial burden that a serious illness can put on the patient and their family. The fact of the matter is that most healthcare insurance policies won’t cover all of the medical bills that come with a terminal illness.
Sometimes, especially with cancer patients, they have to go out of town or even out of state to find the right place to get the treatments they need. However, viatical settlements act as an emergency fund for people with a serious illness and a short life expectancy.
Before applying for a viatical settlement, it’s a good idea to do your research to find the right viatical settlement provider or broker. American Life Fund has years of experience dealing with people who are ill and at the end of their rope medically, mentally, and financially, and they provide knowledgeable and sensitive customer service to ill patients.
If you have a universal policy, you can borrow against your equity.
If you have a universal policy and you’re not terminally ill, you should think twice before selling your life insurance policy. Even if your credit is poor and you can’t get a loan from any of the traditional financial institutions, you can borrow against the equity in your universal policy.
When you get a loan and use your life insurance policy as collateral, it works similarly to a home equity loan. As you pay off the loan, you regain the equity in your policy, and it goes toward your policy. If, however, you fail to repay the loan in full before you pass away, your insurance company can seize whatever you owe them from the payout of your death benefit.
Your life insurance policy is a great financial tool if you use it correctly. Whether you need money for medical care, a new home, or even to remodel your home, your life insurance policy provides you with several options to get the funds you need.
