- 10,275
And by the way...
Viatical companies frequently try to convince investors that an investment in a viatical is "guaranteed" because everybody dies. But that is not the proper way to measure the worth of any investment, even a viatical settlement. What is not guaranteed is the date of death of the insured person (viator). The return on a viatical settlement is completely dependent on when the viator dies. At a minimum, you should expect to have your principal returned with the additional amount promised by the viatical company, but that is hardly the same as saying that your return is guaranteed as of the projected date.
The viatical salesperson will ask you how long you want to invest. Your decision determines the amount of return on your investment, but not the rate of return. For example, let's say you want to invest $10,000 for two years. The company tells you that your return will be $2,280, for an annualized return of 11.4 percent per year. However, if the viator dies in four years, instead of two, the annualized return drops to 5.5 percent. The longer the viator lives, the lower your annualized rate of return.
However, that is not the worst case scenario. It is possible that your return could be negative if the reserve fund set aside to continue to pay policy premiums is depleted before the viator dies. You and other investors could be the ones left to continue making premium payments without which the policy would terminate. If that premium were unpaid, the policy would be canceled and you would lose your entire investment.
And remember, just because you want to continue making premium payments does not mean all of the other investors will wish to do so. You could still lose your investment if the other investors who were pooled together with you to purchase the policy now fail to make their pro rata premium payments for the next period. In that case, you could be offered the right to assume the interest of one or more of those other investors. If you were to do so, your pro rata share of the policy proceeds would increase along with a larger responsibility for any additional premium.
Viatical settlement investment companies sometimes advertise that investors cannot lose their investment, as one can do in other types of investments. This is false. There have been complaints from a number of individuals who have invested in viaticals and have lost their entire investment. As with any investment, an investment in viaticals includes risk and anyone considering investing in them should research the matter thoroughly before investing.
O.G
Viatical companies frequently try to convince investors that an investment in a viatical is "guaranteed" because everybody dies. But that is not the proper way to measure the worth of any investment, even a viatical settlement. What is not guaranteed is the date of death of the insured person (viator). The return on a viatical settlement is completely dependent on when the viator dies. At a minimum, you should expect to have your principal returned with the additional amount promised by the viatical company, but that is hardly the same as saying that your return is guaranteed as of the projected date.
The viatical salesperson will ask you how long you want to invest. Your decision determines the amount of return on your investment, but not the rate of return. For example, let's say you want to invest $10,000 for two years. The company tells you that your return will be $2,280, for an annualized return of 11.4 percent per year. However, if the viator dies in four years, instead of two, the annualized return drops to 5.5 percent. The longer the viator lives, the lower your annualized rate of return.
However, that is not the worst case scenario. It is possible that your return could be negative if the reserve fund set aside to continue to pay policy premiums is depleted before the viator dies. You and other investors could be the ones left to continue making premium payments without which the policy would terminate. If that premium were unpaid, the policy would be canceled and you would lose your entire investment.
And remember, just because you want to continue making premium payments does not mean all of the other investors will wish to do so. You could still lose your investment if the other investors who were pooled together with you to purchase the policy now fail to make their pro rata premium payments for the next period. In that case, you could be offered the right to assume the interest of one or more of those other investors. If you were to do so, your pro rata share of the policy proceeds would increase along with a larger responsibility for any additional premium.
Viatical settlement investment companies sometimes advertise that investors cannot lose their investment, as one can do in other types of investments. This is false. There have been complaints from a number of individuals who have invested in viaticals and have lost their entire investment. As with any investment, an investment in viaticals includes risk and anyone considering investing in them should research the matter thoroughly before investing.
O.G