There are very few industries that have expanded as rapidly as the viatical settlement industry. Considering that the target markets for the various firms associated with this industry are the elderly and the dying, it is especially important that advisors practice due diligence and care in researching both the companies involved and the benefits promoted.
In choosing companies to approach, a viator should consider a lot of things. Firstly, does the company hold a license in the policyholder’s state? Many companies are also practicing illegally, not having met the licensing requirements in any of the states that require licensing. The State Department of Insurance must verify the license status of every viatical company.
Another point to consider is if the company is eligible to do business in at least two of the better-regulated states of New York, Washington, and/or Florida. Any company that doesn’t hold a license in at least 2 of the above-mentioned states should be looked at suspiciously. On the other hand, any company that has the license of three or more of the above states should be given top priority when under consideration.
Also, the viator’s policy must fit the company’s size requirement and minimum third-party rating requirements. The viatical company should also guarantee confidentiality in writing. There should not be any charges levied. The viator should not be charged any fee (for example, medical underwriting fee, application fee, due diligence fee, etc.).
Viatical companies either purchase life insurance policies through viatical brokers, or there are companies that specialize in negotiating these policies for the highest offer on behalf of the policy owner.
With so much conflicting information, it is often difficult to figure out the legitimate firms. Those who are considering the use of a viatical settlement – either to sell an existing policy or to invest their money – must exercise caution at all times.
