Search
Close this search box.

Table of Contents

Viator



Definition

A Viator is a term used in life settlement contracts referring to an individual who sells their life insurance policy to a third party for less than its mature value, but more than its surrender value. This may occur when the Viator is terminally ill and needs immediate financial assistance. The third party, often an investor or a company, then becomes the beneficiary and collects the entire amount of the policy upon the Viator’s death.

Phonetic

The phonetic spelling of “Viator” is “vahy-ey-ter”.

Key Takeaways

Sure, here it is:“`html

  1. Viator is an online platform that provides travelers with the ability to research, find, and book thousands of travel activities and experiences worldwide.
  2. They offer a wide range of activities, including city tours, multi-day tours, hop-on-hop-off bus tours, cruises, day trips, cooking classes, historical tours, and many more.
  3. All activities offered by Viator are reviewed by real travelers, ensuring reliability and giving users a sense of security and trust for their bookings.

“`

Importance

The term “Viator” is important in business and finance, particularly in the field of life settlements. A Viator is a terminally ill policyholder who sells their life insurance policy to a third party for a lump sum. This concept is crucial as it offers an alternative financial solution to individuals who may face expensive healthcare bills or other financial pressures. The transaction provides the Viator with immediate funds, which can significantly improve their quality of life or settle unpaid debts. The third party, typically investors or life settlement companies, then collects the death benefit once the Viator passes away. Understanding this term, therefore, is essential for those involved in life insurance and life settlements, as it directly pertains to risk control, investment strategies, and financial planning.

Explanation

A viator is an individual who sells their life insurance policy to a third-party company, often known as a viatical settlement company. The purpose of this interaction is generally due to a terminal or chronic illness present in the viator’s life. The viator, in need of immediate capital for medical expenses or personal reasons, sells their policy for less than its overall worth to gain access to immediate funds. The amount usually ranges between 50%-80% of the policy’s value, permitting the person to manage financial obligations or improve their quality of life.The viatical settlement company, as the new policy owner, takes on the responsibility of paying the policy’s premiums and is also entitled to the full amount of the death benefit once the viator passes away. The central use of this financial arrangement is to allow individuals with a terminal or chronic illness to access a portion of their life insurance policy’s value while still alive. However, it’s often regarded as a risky investment because it’s largely dependent on the life expectancy of the viator. The longer the viator lives past their projected life expectancy, the lower the return on investment for the viatical settlement company.

Examples

1. Life Settlement Companies: Many life settlement companies interact with viators on a regular basis. These are individuals who, due to old age or terminal illness, decide to sell their life insurance policy for immediate cash. This can be hugely beneficial for both parties. The viator gets the funds they need for medical expenses or to improve their quality of life, while the life settlement company can make a profit when the policy pays out.2. Viatical Investors: A person who invests in the life insurance policies of viators is also a real-world example. These investors provide the cash payout to the policyholder, assuming the risk of when the policy will pay out. This investment can generate a greater return than traditional fixed-income securities, albeit with much greater risk. However, it’s a widespread practice, especially in the U.S.3. Charitable Donations: An individual diagnosed with a terminal illness (a viator) could choose to sell their life insurance policy to a buyer, and then donate the proceeds to a charitable organization of their choice. This arrangement allows the person to make a significant donation while still alive and witness the impact of their generosity. The buyer, on the other hand, can still profit from the eventual payout of the insurance policy.

Frequently Asked Questions(FAQ)

What is a Viator in finance and business terms?

A Viator is an individual who sells their life insurance policy to a third party, often at a value less than its maturity value, but more than its surrender value. This is usually done when the policyholder has a limited life expectancy, often due to a terminal illness.

Why would someone become a Viator?

There could be various reasons for someone to become a Viator. They may require immediate funds for treatment or other expenses, or they might not want to continue paying premiums for a policy they feel holds no future benefit to them.

How is the value of a policy determined when sold by a Viator?

The value of a policy when sold by a Viator is typically determined by the life expectancy of the Viator, the type of policy, the premium payments, and the face value of the policy. The less time the Viator is expected to live, the higher the value of the policy.

How does a Viatical settlement differ from a life insurance policy?

A viatical settlement involves the sale of a life insurance policy by the policy owner (Viator) before its maturity or death benefit phase. This contrasts regular life insurance where the benefits are paid out only upon the death of the policyholder.

What are the risks associated with being a Viator?

Some risks of being a Viator include the possibility that the insurance company may contest the original policy, the Viator may live longer than expected which decreases the benefit to the buyer, or facing potential tax implications from the sale of the policy.

Are viatical settlements legal?

Yes, viatical settlements are legal in many jurisdictions, though certain rules and regulations can vary. They became popular in the United States during the AIDS epidemic as a way for terminally ill people to obtain funds.

Can any life insurance policy be sold under a Viatical settlement?

Generally, yes, but it mostly depends on the type of life insurance policy and the rules of the insurance company. It’s best to consult a financial advisor or the insurance company for specifics.

What happens to a Viatical settlement if a Viator outlives their life expectancy?

If a Viator outlives their life expectancy, the buyer of the policy continues to pay any ongoing premiums and will eventually receive the death benefit. There’s no obligation for the Viator to continue paying when the policy is sold.

Related Finance Terms

  • Life Settlement
  • Structured Settlement
  • Policyholder
  • Viatical Settlement Provider
  • Terminal Illness

Sources for More Information


About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More