• Life settlements offer policy holders a way to cash out life insurance policies for market value.stack of cash image by jimcox40 from Fotolia.com
  
  Life settlements, also known in Florida as viatical settlements, are a financial option for life insurance policy owners who no longer need the insurance coverage provided under their policy or who want to convert their policy to cash. (Reference 1) Rather than surrender the policy to the life insurance carrier for the policy's cash value, policy owners in certain circumstances can sell their policies to companies, known as viatical settlement providers. Viatical settlement providers offer to purchase life insurance policies at market value, which oftentimes far exceeds the policy's cash surrender value.
  
  

Life Insurance Policy

• Life settlements may be available if you have a life insurance policy that is currently in good standing with all premiums paid. Typically, you must have had the policy for at least two years prior to entering into a life settlement. To be eligible, you must agree to change the beneficiary of your policy in exchange for the viatical settlement company paying you the current market value of the policy. (Reference 1) The market value is less than the death benefit under the policy. If your policy contains an accelerated benefit clause, however, the viatical settlement company must ensure that the market value exceeds payments you could otherwise receive as accelerated benefits under the policy prior to offering you a life settlement. (Reference 2)
  
  

Life Expectancy Calculation

• The amount you are offered as market value for your life insurance policy will in large part depend on your life expectancy calculation. Life expectancies are calculated by companies licensed in Florida utilizing mortality tables in conjunction with your personal medical records. (Reference 3) Life expectancy providers must be independent from viatical settlement companies or any related investor to ensure Florida residents obtain the maximum payment available for their policies.
  
  

Payment and Rescission Rights

• The viatical settlement company will present you with the best offer it has received from investors and brokers for purchase of your life insurance policy. If you are satisfied with the offer, these funds minus all applicable broker and transaction fees will be paid directly to you within three business days of the insurer acknowledging transfer of the policy. Florida law provides that you may rescind the contract for 15 days after receiving payment if you return all proceeds to the viatical settlement company. (Reference 2)