Viatical Settlements


Health Economics

  • A means by which people with terminal disease may access some of the value of their life insurance. In a viatical settlement, people with terminal illnesses sell their life insurance policies to 'viatical settlement companies' in exchange for a percentage of the policy's face value. The viatical settlement company may in turn sell the policy to a third party. The purchaser continues to pay the premiums, and collects the face value of the policy when the original policyholder dies. The word comes from the Latin word for 'to travel' and is related to the provisions made for subsistence while travelling, with the metaphorical use in the Roman Church of preparation for the passage from life to death and the last Eucharistic rite or 'viaticum'. The market for viatical settlements developed in the US mainly as a result of the rise of AIDS in the late 1980s, with considerable fraud and adverse selection.