Viatical Investment Tips

There are some basic rules of investing that you should keep in mind before you even begin to consider a specific investment such as:

(1) do not invest money that you cannot afford to lose;
(2) the higher the rate of return promised on an investment, generally the greater the risk of loss;
(3) never invest in something that you don't understand; it is always a good idea before investing a substantial portion of your savings to review an investment with an attorney or your independent financial advisor and
(4) if it sounds too good to be true, it is just that.

1. Determine if this type of investment is suitable for you, taking into account your age, current financial status, and other personal circumstances. As a potential investor, you must realize that the life-expectancy information only involves a medical estimate for how long the viator may live. If the viator lives longer than expected, your investment dollars may be tied up for a longer period of time, and you may be paying the premiums for the policy during this time.

2. Check with your state securities department to find out if the viatical investments being offered to you are considered to be securities. If so, registration and antifraud provisions of the securities laws may apply. Other potential sources of information about companies and individuals who have been charged with fraud, other law violations or consumer complaints include the Federal Trade Commission, the Securities and Exchange Commission, the Office of the Attorney General, the state Office of the Insurance Commissioner, and the Better Business Bureau.

3. Do your own research regarding the success of new treatment options or drug advancements for the illness suffered by the viator.

4. Determine who holds the responsibility to pay policy premiums, and for how long. A lapsed policy means that you could lose your entire investment.

5. Determine whether the physician who issued the life-expectancy estimate actually examined the viator.

6. Determine whether the viatical settlement includes any provision for the investor to receive annual statements to track the health and whereabouts of the viator. Inquire whether this service involves an extra charge.

7. Determine whether the settlement provides for an early return of all or part of your investment dollars in case of an emergency. If so, at what cost?

8. Determine what control, if any, will you retain over your investment?

9. Determine who holds the responsibility to obtain a certified death certificate and notify the insurance company when the viator dies. Will this require an extra fee?

10. Determine what financial information or written statements will the provider disclose about its history, solvency, litigation and reliability. You should be aware that if the viatical settlement provider and/or the insurance company goes bankrupt, you could you lose or tie up your investment dollars indefinitely.

11. Choose only policies that are issued by insurance companies with at least an "A" rating according to rating services such as Best, Standard and Poor's, and Moody's.

12. Beware of life insurance policies that are within the contestability period.

13. Beware of policies that may have been issued fraudulently.

14. Be certain you (and co-owners, if applicable) are listed as owners.

15. Be certain you (and co-owners, if applicable) are listed as irrevocable beneficiary.