what is a viator 
a viator is a person who has been diagnosed with a life threatening illness and decides to sell their life insurance policy so they can receive a portion of their death benefit while they are still alive often viators are motivated by the desire to fund costly or experimental therapies that might prolong their life if these therapies are not included in their health insurance coverage they may need to sell their policy in order to afford the treatments out of pocket understanding viatorsa viator is a person who is insured under a life insurance policy and sells their contract to an outside party this transaction is known as a viatical settlement the viator receives a percentage of the policy s death benefit while still alive the proceeds from a viatical settlement are tax free 1 after selling the policy the viator gives up life insurance protection their heirs will no longer receive a death benefit payout many jurisdictions define a viator as a person with a terminal or life threatening illness 2 other states allow viators who are not seriously ill to sell their policies within specific guidelines 3reasons for a viatical settlementviators often turn to a settlement to pay for healthcare treatment a life insurance policyholder may not be satisfied with the extent of the coverage they receive from their health insurance provider for example a person suffering from an expensive illness may feel their provider only covers basic treatment options they may believe the insurer is failing to take advantage of newer or more experimental treatments that might reduce their symptoms or even extend their lifespan in this situation the policyholder may wish to take their treatment options into their own hands they forfeit their life insurance policy in favor of a lump sum they can use today for their own medical expenses viators may be terminally ill life expectancy less than two years or critically ill unable to perform typical functions of daily living 4viatical settlement providersto complete a sale viators need to find a counterparty known as a viatical settlement provider vsp who is willing to purchase their life insurance policy in order to generate a profit the vsp purchases the life insurance policy at a discount paying the viator less than its face value the typical viatical settlement is around 50 to 70 of your death benefit 5 if you have a 1 million policy you likely would receive 500 000 to 700 000 for a viatical settlement the vsp is then responsible for making the policy s premium payments for the duration of the viator s life upon the death of the viator the vsp receives the full death benefit of the insurance policy 6viatical settlements are not without risk for investors a viator may experience remission or take advantage of an experimental procedure that prolongs their life or cures them completely in that case the vsp may be responsible for many more years of premium payments than they had budgeted for reducing their eventual profit on the transaction and potentially leaving them with an overall loss because of this some vsps will purchase policies from multiple viators at once in order to have policies paying out at different times offsetting their risks real world example of a viatorted smith was recently told that his cancer prognosis has worsened and that he has only six months to live when ted s children were younger and still lived at home he took out a life insurance policy so that his family would be taken care of if something should happen to him over the years his business and investments did well and he was able to save up a substantial amount because of this he is now financially secure and his family will not need to rely on a life insurance payout after his death with this in mind ted decides to try an experimental procedure he heard is having great success in curing cancers like the one that he has been diagnosed with after raising this issue with his medical insurance provider however he is told that they are not willing to cover this expensive new procedure for this reason ted decides to sell his life insurance policy and become a viator ted seeks out a viatical settlement provider and together they negotiate a settlement on the policy as the policy s beneficiary ted s wife would have received a payout of 500 000 upon his death now ted is selling the policy to the vsp for 250 000 ted will receive approximately 50 percent of what his original payout would have been and the vsp will make a profit of 250 000 minus any monthly premiums it makes until the time of ted s death thankfully the treatment ted obtained works as intended and his cancer goes into remission the vsp is now responsible for making the monthly premium payments on the policy for the remainder of ted s life that could be many years from now reducing the vsp s estimated profit from the transaction 