Viatical Settlements: Understanding Viaticals in 2021. A viatical settlement is a type of life settlement reserved for those diagnosed with a chronic or terminal illness. A viatical occurs if someone who bought a policy from a life insurance company, and sells it after falling chronically ill.

How do viatical settlements work?

A viatical settlement allows you to invest in another person's life insurance policy. With a viatical settlement, you purchase the policy (or part of it) at a price that is less than the death benefit of the policy. When the seller dies, you collect the death benefit.

Who qualifies for a viatical settlement?

As mentioned earlier, only people diagnosed as terminally or chronically ill are eligible for a viatical settlement, whereas you are not required to be sick for a life settlement. Life settlements are also sometimes called “senior settlements” because they are usually made to individuals 65 and older.