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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO LIFE INSURANCE
Arrangements to sell insurance policies have a number of dierent names. ey
are most frequently referred to as viatical settlements or life settlements. In these
agreements, the owner of the policy sells the policy to a life settlement company,
sometimes referred to as a viatical settlement provider, for cash. e amount paid
will be more than the policy’s cash surrender value but less than the death benet.
ese arrangements were developed initially for people with life-threatening
illnesses; however, they are now also being used when:
• the life insurance policy is no longer needed or wanted;
• the premium payments have become unaordable;
• the policyholder is considering surrender of the policy;
• the policy is about to lapse;
• there is a change in estate planning needs, nancial circumstances or life
circumstances, such as divorce or death; or
• the policyholder needs funds to pay for health care or long-term care.
In these transactions, the existing policy is purchased by a life settlement company
that either holds the policy to maturity, pays the required premiums and collects
the net death benet or resells the policy – or sells interests in multiple, bundled
policies – to hedge funds or other investors.
Maryland law requires that brokers who sell viatical settlements and life settlements
have a license to sell life insurance from the Maryland Insurance Administration (MIA)
and that they are registered with the MIA. A list of registered brokers and settlement
companies is available on the MIA’s website at www.insurance.maryland.gov. Remember,
the broker works for you and has a duty to look out for your best interest.
FREQUENTLY ASKED QUESTIONS
HOW MUCH MONEY WILL I GET IF I ENTER INTO ONE OF
THESE ARRANGEMENTS?
e amount of money you receive will depend upon a number of factors, including
your age and medical condition, the type of life insurance policy (e.g., universal
life, whole life, term), amount of the death benet, dollar amount of premiums
necessary to keep the policy in force, and amount of compensation the life