Viatical Settlements Vs. Accelerated Death Benefits: What’s the Difference
When facing a serious illness, many people look for ways to access the value of their life insurance policy. Here at Life Insurance Settlements, Inc., we are here to help. Two common options, a life insurance viatical settlement and an accelerated death benefit (ADB),have some fundamental differences that are often the distinctions that make one or the other better for your situation.
The Viatical Settlement Path
A viatical settlement is the sale of your existing life insurance policy to a third-party investment company, like us. This transaction provides you with a significant lump-sum payment. In exchange, the buyer takes over all future premium payments and becomes the sole beneficiary of the policy, receiving the full death benefit later.
The Accelerated Death Benefit Option
An accelerated death benefit, or ADB, is a feature or rider within your actual insurance policy. This option allows you to receive an advance on your death benefit directly from your insurer if you are diagnosed with a qualifying illness. It is not a sale but rather an early payout from your existing provider.
The Source of Your Funds
The biggest distinction is the source of the money. With an ADB, the funds come directly from your original life insurance company. With a viatical settlement, the money comes from an entirely separate company that specializes in purchasing policies. This fundamental difference influences the entire process and the final payout amount you receive.
Payouts and Your Policy’s Future
When you cash out life insurance with an ADB, you receive a portion of the benefit, and your beneficiaries may still get a remainder. A viatical settlement typically yields a higher cash payout but permanently terminates your ownership of the policy. The buyer receives 100% of the future benefit for taking on the risk.
Choosing between a life insurance viatical settlement and an accelerated death benefit depends on your personal financial needs and policy details. While an ADB is a good feature, a settlement often provides greater immediate value. Contact Life Insurance Settlements, Inc. to see if selling your policy is the right decision for you.
