A viatical settlement is one option for getting cash from life insurance, for a person with a terminal illness. With a viatical settlement, a company purchases a life insurance policy for a percentage of its face value, continues to pay the premiums and then collects the insurance payout when the ill person dies. Viatical settlements are used by people with AIDS, cancer or other terminal illnesses. The percentage of the life insurance that one receives is based on life expectancy among other factors, though if the person lives longer than expected, the money is still theirs to keep.
One must be wary of fraud and cautious before signing any agreement, but a viatical settlement is one of several ways for an ill person to get cash from their life insurance for medical expenses, living expenses, or simply to spend the money on something they'd enjoy while still alive.

Instructions

1 Compare all the options available for getting cash from one's life insurance in addition to viatical settlements, such as borrowing against the value of the life insurance or cashing out the policy, or asking the insurance company about an accelerated benefits option. Consider the effect on taxes and eligibility for SSI, Medicaid or other benefits, and also realize that with some options, including viaticals, beneficiaries will no longer get proceeds from the life insurance.

2 If a viatical settlement seems the best choice, make sure your policy fits the basic requirements. If it's newer than two years or is still within the period when the company may contest the policy, it may be hard to sell the policy. The policy must be in good standing, and free from liens and not being used as collateral, nor have any restrictions that prevent it from being sold.

3 Look for a viatical settlement broker or provider. Your insurance agent may be able to recommend one or you can find many by searching online, but be cautious, since it's important to choose an honest one that will give as good a deal as possible. Narrow your search down to a few that seem reliable and check them out thoroughly with the Better Business Bureau, by looking for complaints about them online, and by inquiring with your state attorney general's office about complaints. If your state Insurance Regulatory Commission requires viatical companies to be registered in your state, make sure any company that you do business with is properly registered.

4 Compare terms and offers from several viatical settlement brokers. Before requesting an offer, ask about how the viatical company will protect your privacy, since you must provide medical information to get a quote. You may also want to request that they set up an escrow account with a reputable financial institution, to show that funds are available when the sale is completed. Before you get a quote, you can ask if they'd be willing to do this after you accept their offer, since it's a further indication of their honesty. Also inquire if there is a "cooling off" or rescission period of several days after completing the sale, when you can change your mind. Compare the amount offered by several companies and don't fall for high-pressure sales. An offer does not obligate you to complete the sale.

5 If you agree to the offer, continue to pay your life insurance premiums until you're told not to by the company, to make sure the insurance doesn't lapse during the sale. When the sale is completed, the viatical settlement company will take over the payments and you'll receive the agreed-upon funds.

Source: http://www.ehow.com