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VIATICAL SETTLEMENTS FOR BUSINESSES By: Stephen M. Watson, Esq. Viatical settlements are the sale of existing life insurance policies at a percentage of the death benefit that will be paid when the insured under the policy dies. Often a policyholder will find that they have more of a need for a portion of the money now, than they do for the death benefit payout later on. How does this service fit in for business people? Life insurance policies can represent millions in assets. For instance, often when a business merges with another, or is acquired by another, the key person or buy/sell agreement policies transfer to the new owner and become assets of the new entity. The key persons of the acquired entity, however, are rarely also key persons of the new entity. Thus, the acquiring company is generally left with three choices: 1. stop the premium payments and let the policies lapse; 2. cash the policies in for the cash surrender value; or 3. keep the payments current until the death of the insured, and then collect the death benefit. Now, there is a very attractive alternative: SELL THE POLICIES. Selling the policies will often bring more value to the business than simply cashing the policies in, and for those term policies, it is very exciting to know that even those can be sold, unlocking resources of cash that were unknown before! Stephen M. Watson, President of Viatical Settlement Professionals, Inc., is an attorney and licensed Viatical Settlement Broker. He is a graduate of The University of Virginia, and Washington & Lee University School of Law. |
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