Can Viaticals Only Be Used for End of Life Medical Expenses?

Seniors often ask themselves about saving money in the long run as they reach and pass retirement age. 10.6 million seniors in the United States opt to continue working past retirement age, and for a bevy of reasons. Cash flow is often at the root of this decision. Whether you are a homeowner with a mortgage payment remaining due on your home every month or you have taken on extra financial and social responsibility with your grandchildren and want to keep working in order to provide for their wellbeing, financial security remains paramount no matter how old we get.

One thing that can derail plans more often than the rest is unexpected medical bills. Medical treatment can be incredibly pricy in the United States, no matter the health insurance coverage you have to help out with these things. Many seniors are forced to dip into savings accounts or other financial assets in order to cover these expenses in the short term. An alternative to gutting your savings account to pay for life-saving treatment is to approach a viatical settlement broker. However, by no means are viatical settlements limited to use in emergency medical situations. In truth, you can use the cash payout from a viatical settlement to fund anything you desire.

How viatical settlements work.

A viatical settlement is a renegotiation of your life insurance policy at its most basic level. This financial instrument offers one of the best ways to engage your capital without touching the highest interest-earning portions of your portfolio. This way you can continue to generate wealth with your investment profile while tapping into a cash flow that would otherwise remain stagnant, waiting, morbidly, for you to die before its activation.

Those who opt for a viatical settlement are trading off their life insurance policy’s death benefit for a lump sum payout that occurs immediately. It’s important to note that this is often about 60 percent of the face value that your beneficiary would receive if you were to keep up with your current premiums and maintain the life insurance policy for the rest of your life.

Often times, life insurance policies are taken out with specific designs to cover the costs of end of life expenses or unpaid debts. Term life insurance, on the other hand, is typically taken out by younger adults who have recently started a family. These policies are made with salary replacement in mind. In the event of a tragedy that results in death or the loss of one’s ability to work, the insurance policy would kick in to provide for your family, covering the salary payments that you stood to make throughout your life in the office. Raising a child costs an average of $233,000 from birth to seventeen, so parents quickly realize that they must take this possibility seriously. The loss of half of all of the income flowing into a home’s coffers can significantly impact the development and opportunities available to a child, and insurance is there to ensure that this doesn’t happen.

Life insurance policies for seniors are unique in that they are paid into in order to defray costs that would eat away at inheritances planned for heirs. Your home, unpaid medical expenses, or credit card debt all take away from the underlying assets that a person leaves behind when they pass. Sometimes this can leave your loved ones with pennies, or even saddled with your debt. For those without this additional burden, however, your life insurance payout acts as a direct cash infusion for your beneficiaries. You may choose to leave this alone, giving your loved ones an extra fiscal boost on top of the assets you leave behind in your will. Alternatively, you could put that capital to work for you, paying off some of your immediate expenses or funneling it straight into your investment portfolio in order to generate additional wealth through some portion of your savings account strategy.

Utilizing a viatical settlement.

You certainly can opt to cash in your life insurance policy with a viatical settlement in order to pay down medical expenses and purchase medication or additional health products that you use every day like CBD supplements, such as CBD oil, or other hemp products. Utilizing a viatical settlement to create a sort of ‘emergency fund’ for medical bills is a great way to separate the anxiety of paying for these essential services from your everyday life. Setting aside a chunk of money for purchases in this realm is the best way to ensure that your medical needs are always taken care of. Medication, treatment, and testing can run up a tidy sum on your checking account or credit card if you aren’t diligent with your finances in the long run. Liquidity is crucial to keep these expenses in check and your wallet from going empty.

However, this isn’t your only option with this money. The viatical settlement can be used in any way you see fit. If you have incurred a large series of health care bills lately, using part of your funds to pay these bills may be a great way to lower your overall debt without taking money out of your savings account, stock market positions, or emergency fund. However, you could also utilize this new cash infusion to finance a home renovation that boosts your home’s value or to take your next vacation without touching the money set aside for the trip.

As a senior, your investment portfolio should be geared toward security and slow-moving growth assets. Index funds, real estate properties, and gold, bonds, and CDs are all great at creating this stability while paying out dividends in the process. Ideally, over the course of your working years, you have generated enough wealth to live on the interest that your assets create rather than drawing on the principle itself. A viatical settlement could be the instrument that knocks your portfolio over this mark. Living off the interest ensures that you will never run out of money — and that you will leave behind an inheritance that may very well ensure the same circumstances for your children.

Your retirement savings are designed to kick in once you stop drawing a paycheck from your former place of work, so building up as much capital as possible is crucial to healthy cash flow going into the future. Your financial goals in the short term should include continued wealth building, but over a longer timescale, it’s important to realize that this principle is your primary means of creating income. Many seniors chose to invest a portion of their savings — alongside a new mortgage to cover a portion of the costs — in real estate property that they can rent out. A rental property gives you access to monthly checks that often outstrip the dividend payouts that stock holdings enjoy. They come on a monthly basis, meaning you don’t have to do any heavy lifting to identify categorized stocks in order to create a monthly dividend schedule or budget quarterly to account for the dividend calendar of your primary earner. This creates the feeling of a more normalized financial picture and can help you create financial stability with your long-term savings accounts.

The long and the short of it is simple: A viatical settlement can act as a major boost in financing new investment buying that will buoy your financial health for years to come, or it can be used to mitigate the costs of unexpected expenses, medical or otherwise.