INSURANCE ISSUES AND VIATICAL SETTLEMENTS – PART I
The Canadian Centre for Elder Law Studies has produced an excellent study paper on viatical settlements.
In the executive summary, the study paper defines a viatical settlement as a transaction in which an insured person with diminished life expectancy transfers the entitlement to receive the death benefit under the policy of insurance to another person. This other person agrees immediately to pay the insured person an amount that is less than the face value of the death benefit and undertakes to pay the premiums for the insurance policy as they come due. A
s is noted in the executive summary, in most Canadian jurisdictions, legislation directed at trafficking in insurance policies (which has its origins in the Depression), renders viatical settlements illegal. There is a small viatical settlement industry based in some of the provinces that lack this legislation. However, in the U.S., the viatical settlement industry has been very active and has, for example, focused on AIDS patients and others suffering from terminal diseases. As such, the viatical settlement industry has expanded considerably.
The aim of the study paper produced by the Canadian Centre for Elder Law Studies was to provide the groundwork for law reform in this area. More on the details of the study in our next blog.
All the best, Suzana and Ian. ——–