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 Posted: Thu Jan 31, 2008 7:53 am Post subject: Viatical Settlements |
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I had read a thread somewhere here a few days ago where a poster had ask about taking out a life insurance policy on his grandmother so he could collect if/when something happened. While I had not done a lot of research into this, I did know there were some investors who would "buy" an elderly or terminally ill persons life insurance policy for about 1/2 of it's value, continue to make the payments then collect when something happened to that person.
After reading the post here the other day I decided to do more research into this to find out just what the law was on this. While I am sure it varies from state to state, it is legal and it's called "Viatical Settlements". However, Ohio is attempting to pass some tougher laws on this practice.
| Quote: | The Ohio Department of Insurance is pushing Substitute House Bill 404, introduced in November, to tighten state law related to what are known as viatical settlements. The practice involves buying someone's life insurance policy for less than its face value, taking over premium payments until the insured person dies, then collecting the full payout.
The practice offers the terminally ill or aged access to cash to pay medical bills or other expenses. For investors, viaticals hold out the promise of profits if the insured individual dies before the premium payments outstrip the payout. |
So for the poster who was asking about taking out an insurance policy on someone in his family, this may be an option where they live. If this type of arrangement is legal in your state this would do away with any possibility that you purchased the policy without the persons knowledge because they actually take the policy out themselves then after (currently 2 years in Ohio ) you can take over the payments and receive the benefits without any questions or legal problems later.
Hope this helps.
mega
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mega
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| Posted: Fri Feb 01, 2008 1:44 pm Post subject: |
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But the person would know about it right?
I think I remember the post that you are referring to, they wanted to know if you could do it without the persons knowledge right?
In this case, if i am reading this right, the person takes it out and then you take over, so they would have to know about the policy if they took it out, right? |
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goodnatured
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| Posted: Fri Feb 01, 2008 9:22 pm Post subject: You are correct |
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The article quotes I posted was a "legal" method of this poster doing what he was asking about. And I do believe you were correct in that he was considering taking out the insurance on granny without her knowing it.
But I think the correct and legal way would be to have her do this and then assume the premium. That way she would be well aware that someone was going to "make out" when she passed. 
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mega
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| Posted: Fri Feb 01, 2008 10:54 pm Post subject: |
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| I think it is courtesy to let the person know that you are wanting to take a policy out on them. I think if you would talk to the family member and explain why you are doing it, they may be open to the suggestion. |
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goodnatured
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