Getting cash out of life insurance has been complicated in 1997 by many factors: the success of new drugs has greatly lowered offers for people with HIV and increased offers for people facing cancer. New federal legislation now requires reporting to the IRS of amounts paid, tax-free status now depends on licensing and residency requirements. At the same time some investor-financed companies are making offers that are 10-20% above normal rates.

Viatication is complicated by difficulties in locating companies that truly had their own funds-and by broker advertising. This is important because broker commissions have recently increased from 5-7% of policy full face value to 10-15% - all paid without the viator's knowledge. Therefore, if the viator is paid a 50% offer the broker commission amounts to 20-28% of the actual funds received. Brokers have incentives to steer business to firms paying the highest commissions - not the highest offers - and to downplay licensing requirements necessary to make the funds tax-free.

It makes sense to use a seller-paid financial advisor to sell the policy directly to buyers without commissions in order to get the highest offer through true competitive bidding. Such an advisor is skilled in making sure that the amount received is tax-free. A neutral financial advisor is more likely to point out cheaper alternatives to viatication such as accelerated benefits and other financial techniques and is likely to both spot and solve other financial problems encountered along the way.

I advise people getting cash out of their life insurance on a fee-only basis. This deductible fee usually turns out to be less than 1/10th the cost of a broker commission - and guarantees objectivity on my part. I advise sellers on their overall finances during the process and in particular take measures to ensure that the amounts received remain tax-free.

Call if you'd like more information on viatication, a copy of some of these articles, or how I structure the selling process to maximize a competitively bid price.

I have written several articles recently on how the new treatments and how new federal legislation have impacted the viatical industry. These include:

• Selling Your Life Insurance Policy: A Post-Protease Update Positively Aware, September/October 1997. This 3000 word summary is the most detailed treatment of what specific steps sellers should take in the current market. Readers might want to compare this to the detailed recommendations given in Viaticating Life Benefits (Case Review, Summer 1996).
• Viatical Settlements: Update on Changes Victory Update, February 1997. This is a short summary of the changes wrought in the New York market, published in the national gay business magazine's newsletter update. Its ideas are relevant for most residents of highly regulated states such as CA and NY.
• Changes Upending the Viatical Market in New York LGNY, January 20, 1997. This much more extensive treatment of issues in highly regulated markets specifically focuses on New York. It outlines how changes in the sources of funding have impacted the maximum offers people can expect. It has a section outlining the thorny tax issues surrounding viatication both pre-1997 and after the new tax law took effect January 1st of this year.
• Viatical Chaos In The LIFE, January 1997. This short piece focuses on the offer impacts seen in New York.
• Panic on AIDS Street In the LIFE, August 1996. This was the first article to signal the drastic impact of new drugs on viatical settlement.

Previous articles on the viatical process are still useful in making sure the highest price is obtained - and that overall finances are improved.

• Viaticating Life Benefits (Case Review, Summer 1996) This is an updated how-to piece for professionals advising people with serious illness.
• Was that buy low, sell high, or...?: Viatical Settlements. (Positively Aware, July/August 1995). This is a master summary of the issues in viatication.
• Living Benefits from Life Insurance. (Victory!, January/February 1995). This is an overview of the viatical process. 11/97