Such settlement technique is first introduced in Canada in the 1970s. The idea was so amazing and it quickly grabbed its position in United States and turned popular in Europe countries finally.Structured settlements refer to compensation payments by periodic allowance system. Usually, such annuity payments established to reimburse the settlement recipients losses of income or working ability in long term.

Monday, 29 June 2009

What Are Viatical Settlements?

The settlements came in to being in the late 1980s with the when the AIDS epidemic first hit & started claiming victims. Because the early victims of AIDS in the United States were mostly gay men who did not have dependents & were not old, the men found that selling a life insurance owner that was acquired through work or other investment practices was a way of extracting the value of the owner while the policyholder was still alive. In lots of of these situations, the individuals that would obtain the funds in the event of the death were the parents of the owner holders. These parents typically had their own life insurance policies & were not in need of their children's policies.

Before there were life settlements, there were viatical settlements. A viatical settlement, when it first originated, was a way of getting the most value for one's life insurance owner in the event of a chronic illness or other cause of death which would permit a person to pay for his or her care.

At the time this settlement came in to existence, the mortality rate for AIDS was high & a person did not expect to live long after the diagnosis was made. This combination made investors reasonably certain that they would be able to collect on their investment in a relatively short time. The combination of events caused a huge surge in the number of viatical settlements that were entered in to as both the buyer & seller saw huge potential benefits.

In general, a viatical settlement is the sale of a life insurance owner by the owner owner before the owner matures. The sale is conducted for a price that is less than the face value of the owner but is still above the premiums paid or the current funds surrender value. The funds surrender value is the amount of funds that the owner holder would obtain if they or he were to turn the life insurance owner back over to the insurance company.

three times the price has been set, the sale will go through, most of the time. The seller, or owner holder, is given an immediate funds settlement & the buyer has made an investment. This type of settlement is usually only used in individuals that have a shorter life expectancy.

As time went on, viatical settlements developed a bad name & reputation in the investing community. The companies that ended up buying the policies from the owner holders usually resold them to individual investors & gave their salespeople huge commissions.