Viatical settlements have been around since 1911, but they were rare until the late 1980’s when the AIDS epidemic peaked.
While not all states regulate viatical settlements, Montana is a state that does. In Montana, viatical settlements are allowed and remain a valuable tool for financial management for ill people.
First, What is a Viatical Settlement?
A viatical settlement is the sale of a life insurance policy to a third party. Typically, viatical settlements happen when people have life-threatening illnesses. Viatical settlements allow terminally-ill life insurance policy owners to sell their policy at a discount from its face value for a lump sum of cash.
When a viatical settlement takes place, the party who buys the policy becomes the new owner, pays the monthly premiums, and then receives the full benefit of the policy when the original policy owner dies.
The parties involved in the transaction are:
- Viator: the life insurance policy owner
- Viatical settlement provider: the person who buys the life insurance policy – a licensed insurance producer
- Viatical settlement broker: the person or company who represents the viator and who can ‘comparison shop’ for the best offer – not always necessary in a sale, but used often
In order to become a viatical settlement provider in Montana, you must get a Montana Viatical Settlement Provider License.
What is a Montana Viatical Settlement Provider License?
Before you can become a viatical settlement provider in Montana (aka purchase viatical settlements), you must get licensed. There are many requirements to complete before you can get your Montana Viatical Settlement Provider License.
Use the Viatical Settlement Provider License checklist and application to apply.
For more information on how to get licensed, contact the Commissioner of Securities and Insurance at 406-444-2040.
To get your license you will also have to secure a Viatical Settlement Provider Bond.
What is a Montana Viatical Settlement Provider Bond?
A Montana Viatical Settlement Provider Bond is a type of surety bond that promises viatical providers will honor all rules and regulations of the insurance code.
If the provider is in violation of the code, someone can make a claim against their bond. When a claim is made, the surety company that issued the bond will investigate the claim. One of two things will happen after the surety company investigates the claim:
- The claim will be determined to be invalid and the claim becomes null and void
- The claim is determined to be valid and the surety company will give the viatical settlement provider company the opportunity to satisfy the claim.
The viatical settlement provider company fails to satisfy the bond claim, the surety company will financially compensate the claimant. The surety company will then go to the viatical settlement provider for reimbursement of that money.
Essentially, the Montana Viatical Settlement Provider Bond holds the viatical settlement provider liable for their actions, no matter what.
How Much Does a Montana Viatical Settlement Provider Bond Cost?
Viatical settlement providers must maintain a Montana Viatical Settlement Provider Bond in the amount of $50,000.
You can purchase a surety bond from a surety bond company like us.
You will not need to pay $50,000 to get bonded. Instead, you will just pay a small portion of the total bond amount.
The price you pay for your bond is largely based on your personal credit score. Usually, you will pay between 1-3% if you have good credit, or 4-15% if you have bad credit.
To see what you’d pay for a Montana Viatical Settlement Provider Bond, get a free quote below.