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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.


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

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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.


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.


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

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