Senior settlements are different than viatical settlements. Viatical settlements involve the selling of the life insurance policy by a person who is terminally ill and whose life expectancy has been predicted to about two years or so. The policyholder may need cash either to ease his financial strains, or to leave something for his children or grandchildren, or to pay for his funeral dues, as the case may be. For this, he can sell his life insurance policy for a lump sum amount to an investor, who would then get the death benefits of the policyholder on his demise. There is a high level of risk involved in this transaction because life expectancy can never be predicted accurately. If the person outlives the predicted period, the investor stands to lose, as he will get lower returns. He may also lose his principal amount if the seller lives long enough and so the investor would have to pay the additional premiums also.
Life settlements or senior settlements are different than viatical settlements. Senior settlements are meant for senior citizens (sixty five years of age or more) and they are not actually suffering from any terminal diseases such as cancer or AIDS. Senior settlements provide the senior citizens a way to obtain a lump sum cash amount for life insurance policies that have outlived their usefulness. They are meant for people who have health problems and have policies worth over $100,000.00.
As a senior citizen, you can sell your policy to a bank or to any financial institution. These institutions will then provide you a cash settlement that will exceed the surrender value of the policy. The senior settlements are also called life settlements and can prove to be a favorable option of cashing your settlement rather than letting the policy lapse.