Viatical settlement

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A vietal settlement (from the Latin "viaticum") is the sale of an existing policyholder's life insurance policy to a third party for more than the cash surrender value, but less than the net benefit of death. Such sales give the owner the amount policy at once. Third parties become the new owners of the policy, pay monthly premiums, and receive the full benefits of the policy when the insured dies.

"Magical settlement" is usually a term used for settlement involving a severely or chronically ill insured. A person is generally chronically ill if the person (1) is unable to perform at least two activities of daily life, such as eating, using a toilet, bathing himself, or dressing himself; (2) require substantial scrutiny to protect themselves from threats to health and safety due to severe cognitive impairment; or (3) has a disability level similar to that described in (1) as determined by the Secretary of Health and Human Services of the United States. A person is generally very ill if the person has a disease or disease that can be expected to cause death within two years.

As medical advances improve the lives of people living with terminal or chronic diseases, the life-solving industry emerges.

Video Viatical settlement

Histori

Simple settlements became increasingly popular in the United States in the late 1980s, when the AIDS epidemic peaked. The early victims of AIDS in the US are mostly gay men, usually relatively young and without wives or children (traditional beneficiaries under life insurance policies), but often covered by life insurance through employment or as a result of investments. Beneficiaries under the policy are often their parents who do not need the money. A flexible stipulation offers a way to get the value of the policy while the policy owner is alive.

At that time, AIDS death rates are very high, and life expectancy after diagnosis is usually short. Investors are quite confident that they will collect in a relatively short period of time. The combination of these events led to a neglected spike in settlements as investors and viators saw opportunities for mutual benefit.

The US Supreme Court decision of 1911 provided the legal basis for a lasting solution. In Grigsby v. Russell, 222 US $ 149 (1911), Dr. A. H. Grigsby treated a patient named John C. Burchard. Mr. Burchard, who was in need of a certain surgical operation, offered to sell Dr. Grigsby with his life insurance policy in exchange for $ 100 and agreed to pay the remaining premium. Dr. Grigsby agrees and as a result, the first viatical settlement transaction is made. When Mr. Burchard died, Dr. Grigsby tried to collect the benefits. A Burchard real execution challenges Dr. Grigsby in the Court of Appeals and won. This case eventually reached the US Supreme Court where Judge Oliver Wendell Holmes Jr. submit opinions from the court. He states in the relevant section that "As far as reasonable security clearance, it is desirable to give to the life policy the ordinary characteristic of the property." To deny the right to sell except to a person having such interest is to reduce the value of the contract in the hands of the owner.

The Supreme Court ruling establishes the basic principles upon which life is settled and then, the life-making industry is based: a life insurance policy is a private property, which can be granted at the will of the owner. Illegal settlements rarely occur for nearly eight decades until the onset of the AIDS epidemic.

Unnecessary activity among some bad performers raises fears among consumers about a straightforward settlement. Life insurance companies are concerned with individuals who buy pure policies for speculative purposes. Today, many countries organize living and living settlements and many more develop legislation and regulations. In June 2011, countries that did not manage realistic settlements were Wyoming, South Dakota, Missouri, Alabama, and South Carolina. All other states set up straightforward settlements.

Despite the bad experiences of some investors, a fixed settlement is a valuable tool for the personal financial management of many sick people. A 2002 study showed that among the hospital's financial advisors who had had some experience with strict settlements, most reported positive experiences.

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Famous cases

Benefits Mutual

One of the most notorious viatis cases is the Mutual Benefits Corporation headed by Peter Lombardi in Florida, which has 28,000 investors and focuses on paying for HIV clients. In 2004, the Stock Exchange Commission closed the company saying it was involved in a $ 1 billion Ponzi scheme. Lombardi is now serving a prison term of 20 years.

Kelco

In August 2008, Stephen L. Keller, former CEO of Kelco Inc., filed a motion to the United States District Court for the Eastern District of Kentucky, with Judge Karl S. Forester, to deny Keller's conviction of conspiracy, fraud and money laundering. Keller's confidence is generated from Kelco who purchases a life insurance policy from HIV/AIDS patients who lie in the application. Keller's motion was rejected on November 12, 2010. His appeal for rejection was also rejected, on February 28, 2011.