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What Can You Do With Viatical Settlement Money?
People who receive viatical settlements receive a cash payout for the sale of their life insurance policy. The payment is tax-free and can be determined by several variables, including the insurance policy’s value and the life expectancy of the policyholder. Buyers offer less than the life insurance policy’s benefit amount, but the seller gains access to the funds while they’re still alive.
There are conditions for eligibility that must be met to qualify for viatical settlements, so you may be wondering if there are conditions that determine how you can use the money. Learn about your options and the potential benefits and disadvantages of pursuing a viatical settlement.
Benefits of Viatical Settlements
What is a viatical settlement? Viatical payments are tax-free payments to terminally ill people in exchange for their life insurance policy. Since these payments are tax-free, you can keep the entire amount you receive. The payouts received through viatical settlements aren’t income, which means that if you’re receiving benefits because you’re unable to work, you won’t need to worry about the payment affecting your eligibility.
When a buyer purchases your insurance policy, you no longer have to make policy payments. The buyer is responsible for any outstanding fees due to the insurance company, which reduces your monthly bills.
Spending the Cash Value of Your Viatical Settlements
There are no restrictions on how you can use the money you receive from your viatical settlement. Whether you opt to spend the money on practical, medical, or personal needs is up to you. Depending on your illness, you may be able to use the cash value of your viatical settlement to take some time and relax on a vacation, or you can use it to settle debts and pay for outstanding medical expenses so that your beneficiaries don’t need to worry about them later. If you’re trying to figure out how best to manage the cash value, you can speak to a financial planner or consult with the compant that’s providing the viatical settlement.
You may opt to use the money to cover practical things, like covering medical expenses, paying off your mortgage, or prepaying for your funeral. Some individuals appreciate the peace of mind that comes from knowing these matters have been handled. Prepaying for your funeral can also be an effective way to ensure your wishes are met and that your funeral service honors your choices.
If you have dependents who would have been the beneficiaries of the death benefit received as a result of your life insurance policy, you may be concerned about providing for their future. You may opt to invest some or all of the money from your viatical settlement in trust funds to ensure that your dependents are cared for after you pass away.
Medical expenses are costly, and you may need the money from your viatical settlement to pay for treatment. You can also use your funds to pay for medications and personal care. The cash value can also be used to hire a personal care aide or a home health aide. These professionals can come to your home to clean your house, cook meals, transport you to medical appointments, and provide personal care.
You may decide to invest in yourself once you’re diagnosed with a terminal illness. One great way to do this is to choose a peaceful vacation destination and go on vacation. Make a list of the places you’ve always wanted to see and visit them. You may opt to spend time at the ocean or the mountains, visit popular tourist destinations, revisit favorite places you’ve been to before, or travel the world.
Another option is to create a bucket list and use your viatical settlement funds to complete your list items. Popular bucket list items include riding in a hot air balloon, skydiving, running a marathon, and bungee jumping are all everyday activities people want to do once in their life. You may also have specific events you want to attend, such as the Olympics.
Leaving Gifts to Others
You may opt to leave things, or a sum of money, for the essential people in your life. Some individuals invest in recurring gifts for their spouse or others. This can include sending flowers or wine every year on their birthday or Valentine’s Day.
You can also hire someone to help you organize and preserve memorable photographs and video footage. Reviewing your images and video is a great way to relive memories. You can also compile a collection for friends and family to enjoy for years to come. It’s possible to preserve photos in scrapbooks, save them on a digital storage device, and create video slideshows that splice together videos and still images. You can even narrate a video you make for your loved ones.
If you want to tell your story, hire an author to write a biography. You can work with them to relay significant events and even incorporate photographs in the book. You can use multiple platforms to affordably print books you can leave for the people closest to you. If you prefer, you can have an author write out your story and then record yourself reading it and make an audiobook file so your friends and family will be able to hear your story in your voice.