Legal Definitions - viator

A viator is an individual who holds a life insurance policy and, due to a terminal or chronic illness, decides to sell that policy to a third party. In exchange for transferring ownership of their policy, the viator receives an immediate lump-sum cash payment, which is typically a percentage of the policy's total death benefit. This process is often referred to as a "viatical settlement."

Here are some examples to illustrate this concept:

• Example 1: Funding Experimental Treatment
  Mrs. Chen, an elderly woman, is diagnosed with a rapidly progressing terminal illness. Her health insurance does not cover an experimental treatment that she believes could extend her life or significantly improve her comfort. She holds a substantial life insurance policy, but her beneficiaries are financially secure. To fund the costly treatment, Mrs. Chen decides to sell her life insurance policy to a viatical settlement company. She receives a significant cash sum upfront, which she uses to pay for her medical care.

  Explanation: Mrs. Chen is the viator because she is a terminally ill life insurance policyholder who sells her policy to a third party for an immediate lump-sum payment to cover her medical expenses.

• Example 2: Managing Long-Term Care Costs
  Mr. Davies, a middle-aged man, suffers from a severe chronic illness that requires extensive long-term care, which is quickly depleting his retirement savings. He has a life insurance policy and realizes that the cost of his ongoing care will soon exceed his financial resources. To ensure he can continue receiving the necessary care without burdening his family, Mr. Davies sells his life insurance policy to an investor. The investor pays him a portion of the policy's face value upfront, providing him with the funds needed for his long-term care.

  Explanation: Mr. Davies acts as the viator because he is a chronically ill life insurance policyholder who sells his policy to a third party for immediate cash to manage his long-term care needs.

• Example 3: Enhancing Quality of Life and Pre-Paying Final Expenses
  Ms. Rodriguez, a retired teacher, is diagnosed with a debilitating chronic condition that significantly reduces her quality of life and mobility. She wishes to fulfill a lifelong dream of taking a final trip with her family while she is still able, and also wants to pre-pay for her funeral expenses to ease her family's burden. She owns a life insurance policy that she no longer feels is essential for her beneficiaries, as they are financially stable. She opts to sell this policy to a settlement provider, receiving a cash payment that allows her to take her trip and cover her final arrangements.

  Explanation: In this scenario, Ms. Rodriguez is the viator by selling her life insurance policy due to a chronic illness, receiving a lump sum to improve her quality of life and manage end-of-life expenses.