What is a life or viatical settlement?

A life or viatical settlement is a proven financial strategy that enables eligible policy holders to sell their life insurance to a funding institution and receive a lump sum of cash. As defined by the Life Insurance Settlement Association: a viatical or life settlement is the sale an existing life insurance policy to a third party for more than its cash surrender value but less than its net death benefit. 

What is the difference between a life and a viatical settlement?

Life settlements generally involve individuals over the age of 65.

Viatical settlements generally involve individuals of any age who are terminally or chronically ill.

However, these terms are not consistently used in this manner in the laws and regulations of each state. For example, some states use the term viatical settlements to refer to the sale of all life insurance policies, regardless of whether the insured in terminally or chronically ill or not.  And at least one state uses the term life settlements to refer to all transactions, including ones in which the insured is terminally or chronically ill.

How does it work?

Step 1: An Alantra representative or a trusted advisor (your accountant, attorney, estate/financial planner, insurance agent/broker) will help you complete the necessary paperwork including a confidential application, disclosure and authorization forms. Alantra respects your privacy and will gather only information that is absolutely essential to the settlement process. In addition, Alantra protects the confidentiality of your information by employing the strictest security measures throughout the settlement process.

Step 2: Once Alantra receives your completed paperwork and a copy of your life insurance policy, we put our expert staff and unrivaled resources to work for you! We start by thoroughly reviewing all of the documents so your settlement is not delayed due to missing or incomplete paperwork.

Step 3: With your written permission, we obtain required records from your insurance company and doctor to verify your life insurance and medical status.

Step 4: A third-party professional medical underwriter will review your medical records and apply standardized actuarial formulas to calculate your life expectancy and assess risks.

Step 5: Alantra will request settlement proposals from the world's leading accredited funding institutions (providers).

Step 6: The funding institutions will assess your documents and calculate the market value of your policy by considering your projected life expectancy and the cost to keep the policy in force for the rest of your life. Often, settlement offers vary from one funding source to another.

Step 7: The funding institutions submit offers to Alantra. Alantra carefully analyzes the offers and negotiates the highest possible cash settlement for you. Your settlement will be more than the cash surrender value of the policy, but less than the death benefit.

Step 8: We will promptly inform you of the maximum offer with a letter of offer and acceptance.

Step 9: Once you and your advisor review the offer, you decide whether or not to sell the policy. You are under no obligation.

Step 10: If you accept the offer, Alantra will gather the necessary legal paperwork and send it to you or your advisor. You will need to sign the legal documents in front of a witness and have them notarized.

Step 11: Once Alantra has all of your signed closing documentations, we contact your life insurance company and the company transfers the policy ownership and beneficiary from you to the purchasing institution. Alantra ensures strict compliance with all legal and regulatory requirements throughout the settlement process.

Step 12: When your insurance carrier notifies the funding institution that the ownership and beneficiary transfer has been completed, the funding institution will arrange for you to receive your settlement payment via a bank check or wire transfer within 24-72 hours or whatever time period is legally mandated by your state of residence

Step 13: The funding institution begins paying your policy premiums. You will never have to pay another premium on the policy.

Your settlement is complete and you have the freedom to use the cash however you wish!

Do I have to pay the policy premiums after the settlement?

No. Once the settlement is complete, the funding institution assumes all responsibility for the policy premiums, freeing you from this obligation.

Am I restricted in how I can use my cash settlement?

No. You have complete freedom to use the money as you wish.

How is the amount of my cash settlement determined?

Your settlement is based on the market value of your policy which is calculated by considering your projected life expectancy and the cost to keep the policy in force for the rest of your life. Your settlement will be more than the cash surrender value of the policy, but less than the death benefit.

Who receives my policy's death benefit?

When the funding institution pays you a lump cash sum, ownership of the policy transfers from you to the institution. The funding institution pays the policy premiums for the rest of your life. In return, the funding institution receives the policy's death benefit.

How does a settlement affect my taxes?

As with any financial decision, you need to carefully consider the tax implications of a life or viatical settlement before completing a transaction. The taxation of a life or viatical settlement can be complex and tends to vary by state. Alantra has prepared a general overview of tax considerations , however, we recommend that you consult with a tax advisor to discuss your specific situation. Please note that Alantra does not provide tax advice.

What other considerations are important?

Receipt of payment for a life or viatical settlement may affect your eligibility for public assistance programs, such as medical assistance (Medicaid), aid to families with dependent children, supplementary social security income, and AIDS drug assistance programs; and it also may be taxable and subject to claims of your creditors.

Entering into a life settlement contract may forfeit other rights or benefits such as disability waiver of premium benefits that may exist..

Alantra recommends that you consult with a financial/tax advisor and all appropriate social services agencies before pursuing and completing a life or viatical settlement.

Do I qualify?

The general eligibility requirements are:

• The life insurance policy is at least 2 years old with a face value of at least $150,000. Lower face values may be considered if insured has a shortened life expectancy.
• The insured is at least 65 years old.
• The insured's life expectancy is less than 12 years.
• The insured experienced a change in health since the issue date of the policy. Alantra never requires a medical examination. We review existing medical records to verify health status.
• The life insurance carrier is rated B+ or better.
• Any type of non-contestable life insurance policy qualifies, including term, whole life, universal life, joint-survivorship, group, corporate-owned policies (COLI), key-man, and life policies held in irrevocable life insurance trusts.
• The policy owner does not need to be the insured. The policy owner may be a family member, an employer, a charitable organization or any other entity with an insurable interest in the life of the insured.
• In general, the annual premium should be less than 5% of the policy's face value.

Alantra provides a self assessment tool to estimate if you qualify. However, your eligibility cannot be accurately determined until a confidential Alantra assessment is completed. Call 877-641-Life (5433) or email us at AdvisorBenefits@alantralife.com to secure a confidential assessment of your policy's value.

Evaluate Your Eligibility

How long does the settlement process take?

There are several steps in the process and Alantra strictly adheres to all legal and regulatory guidelines. Once an application and required materials are submitted to Alantra it takes approximately four to six weeks until the payment of the maximum cash settlement.

Must the policy owner be the insured?

No, the policy owner does not need to be the insured. The policy owner may be a family member, an employer, a charitable organization or any other entity with an insurable interest in the life of the insured.

Should I consider a life settlement?

There are many situations when a life settlement is a practical financial strategy such as:

• You need the cash to pay for unexpected expenses, such as medical costs
• You prefer to use the cash to maintain your financial security during retirement
• You'd like to fund that trip you've always dreamed about or help your grandchild pay for college
• You are considering lapsing or surrendering the policy
• You have a need for new life insurance, annuities, or long term care insurance (you can receive a settlement from your existing policy and use the settlement to fund new investments)
• You have outlived the beneficiaries of your policy
• Changes in estate taxes make it beneficial to receive a settlement
• Your health status has changed
• You are liquidating assets due to bankruptcy

Alantra recommends that you discuss your option with a trusted advisor such as an accountant, attorney, financial/estate planner, or an insurance agent/broker. You can also discuss your situation with Alantra by calling 877-641-Life or 877-641-5433.

How do I obtain a confidential assessment of my policy's settlement value?

Call 877-641-Life or 877-641-5433

Do I need a medical exam?

No. Alantra never requires a medical examination.

Is the information I provide kept confidential?

Alantra respects your privacy. We gather only information that is absolutely essential to the settlement process AND we protect the confidentiality of your information by employing the strictest security measures throughout the settlement process.

How is my life expectancy determined?

Professional medical underwriters will review your medical records and apply standardized actuarial formulas to calculate your life expectancy. Alantra is not involved in the calculation process. It is confidentially handled by accredited third parties. However, we protect the confidentiality of your information by employing the strictest security measures throughout the process. Alantra never requires a medical exam.

How much time will it take before I receive a cash settlement?

Alantra guarantees to expedite the maximum settlement for you. Normally, the process takes four to six weeks. However, sometimes extenuating circumstances can extend the process.

What types of life policies qualify for a life or viatical settlement?

All types of life insurance policies qualify including: whole life, universal life, term, joint-survivorship, group, key-man, corporate-owned policies (COLI), and policies held in irrevocable life insurance trusts.

What are the Alantra Benefits?

Alantra's service, expertise and resources are beyond compare which enables us to guarantee that we will expedite the maximum settlement for your policy.

What if I change my mind?

Throughout the process up until you sign the closing documentation, you are under no obligation. Once you sign the closing documentation, you have the right to change your mind within 15 calendar days (30 days in some states) from the date you received the funds. Details of the rescission period are included in the Life Settlement Purchase & Sale Agreement.

If your specific question was not answered in this section of our Web site, please contact an Alantra Client Advocate at 877-641-Life (877-641-5433) or SuperiorService@alantralife.com. We welcome the opportunity to assist you!