Purpose

• Viatical settlements are used by insured patients who are terminally ill and who require money in order to support themselves during the final months of their lives, a time during which they typically are unable to earn a living. Since terminally ill persons are considered to be vulnerable, state laws regulate viatical settlements in order to protect the insured.
  
  

State Regulation

• Most states have enacted laws pertaining to viatical settlements. For example, Title 18, Chapter 75 of the Delaware Insurance Code contains the Delaware Viatical Settlements Acts. Like Delaware, most other states have codified their viatical settlement regulations in their insurance code. Regulations vary from state to state.
  
  

Scope

• State viatical settlement regulations cover not only the negotiation and formation of such an agreement, but apply to the ensuing transaction. For instance, in Delaware, all viatical settlement brokers must be licensed by the state and must obtain a written document from a doctor demonstrating that the insured was competent when he decided to sell his life insurance policy. Likewise, In New York, an insured person has 15 days after receiving money to rescind the agreement.