Research On The Rules Of American Viatical Settlements

The viatical settlements originated from AIDS crisis in 1980 s and they belong to the secondary market of life insurance policies.Among the infected half of them would die within one year after being diagnosed while eighty-five percent would face death within three years.Those people not only suffered from debilitation physically but also were isolated from the society,and they were often not allowed to go to work.Most of them just had the insurance policies which were provided by the employers.When the viatical settlements emerged in the market these victims got the chance to sell the life insurance policies and got the cash,and with which AIDS suffers could pay the expensive medical expenses.As the advancement of medical technology,life expectancy of AIDS suffers has been extended dramatically.To increase their income the investors then focused on terminally ill policyholders and old people.To date the old account for most of the market.Comparing with other financial products viatical settlements have high earning rates and they can not be effected by the economic fluctuation easily.More over American government implements preferential tax policy as a result the viatical settlements develop fast.Now there are various modes of viatical settlements and the trade process becomes more complicated.Because of the dramatic changes a lot of problems appeared such as the lack of regulation moral risks and so on.American government pays high attention to viatical settlements and has legislated against those problems and strengthen the supervision,and now the whole industry has developed very well.Although the viatical settlements are new to our country we have a large demand for viatical settlements.On one hand the high aging population problem is getting more serious and the social security system can?t satisfy the large demand of our population;On the other hand,driven by the high interest the investors tend to invest in those preponderant financial products,and there are many illegal viatical settlement trades which emerge in the coastal regions.It is very easy to trigger risk trade so it is urgent for our government to establish a complete viatical settlements system and regulate the trade process.The purpose of the thesis is to introduce American viatical settlements to others and offer some opinions and suggestions for the development of viatical settlements in our own country in the future.There are five main parts in this thesisThe first chapter introduced some basic information about the viatical settlements and compared it with other insurance behaviors such as accelerated death benefits dissolution of life insurance contract in advance and so on,and by such comparison we get to know more about the advantages of the viatical settlements.The second chapter mainly talked about the operation modes of the viatical settlements.At fist it was simple for the viators to sell their life insurance policies to the companies.Then the trade gradually involve more parties and this mode is called viatical settlements securities.This thesis introduced several famous judicial precedents and make sure that operating mode is within the regulatory control of the securities act of 1933.The third chapter mainly introduced the risks of the viatical settlements and how to guard against and defuse these risks.These risks include moral risks the commodity risks and the credit risks.Among those problems the paper talked more about fraudulent conducts and the difficulty to estimate life expectancy.The forth chapter introduced two famous acts,Viatical Settlement Model Act and Viatical Settlement Model Regulation.Also the thesis illustrated some different regulations of different states.It?s worth noting that American government implements the preferential tax policy which has promoted the development of the industry.The last chapter introduced the realistic demand for the viatical settlements in our country.Also some suggestions about how to develop the industry in our country.It is urgent for our government to formulate laws and regulations,and regularize the behaviors of the parties.