A viatical settlement involves the selling of a life insurance policy by a terminally ill person to unrelated investors who can be private funding companies or brokers. These companies or brokers buy the policy at a reduced rate based on the face value of the policy. They pay a lump sum amount of cash to the seller and on the person demise, they collect the death benefits. Grim as this may sound, if the transactions take place in a fair manner, the viatical settlements can provide relief to the terminally ill person in terms of easing the financial strains, which may other wise compound the physical and emotional trauma the person is undergoing.

Viatical settlement providers are the investors who buy the settlement policies. The New York State law makes it mandatory for these providers to be licensed. So if you are looking for a potential buyer of the life insurance policy, you must make sure to check the license of the company or the broker. It also makes more sense to sell the policy to a funding directly rather than through a broker, because the broker may or may not keep your best interests in mind while finalizing the deal. This is because the brokers usually get a percentage of the death benefits from the viatical purchaser companies. Also, before settling on any company, do contact a few others to get the best competitive rates.

In addition, you must keep in mind that you get the full cash payment at the time of sale. Dont ever agree to partial payments and payment on installments. Your viatical settlement payment should exceed the cash value of your policy. Otherwise the better option would be to surrender your policy for its cash value.

You must check with your insurer if the policy contains provisions for accelerated death benefits. Before selling out, you can also consider options such as reverse mortgages. Most of all, do not give in to pressure tactics. Try to bargain for the best possible rates.