In another variation of early settlement, a life insurance company may offer, as part of a life insurance policy, accelerated death benefits in the event of a terminal illness. Thus, a terminally ill policyholder has the option of getting most of the life settlement early, without having to go through a separate company.

While viaticals may be legitimate businesses, recently some companies have come under investigation for fraud. Viatical transactions can provide a service to the terminally ill, as well as return a benefit to the investor.�But a potential investor should realize that viatical transactions are potential targets for fraud and abuse.�In many instances the investor never collects because the insurance company voids or rescinds a life policy that was fraudulently issued.�Investors stand to lose their entire investment when viaticals turn out to be fraudulent.

Q: If a terminally ill patient gets a pre-payment on a life policy, what percentage of the death benefit originally listed in the policy will he or she get?

A: Typically, viatical companies pay out 60-80 percent. If an insurance company has an early payment option in their policy, it will usually pay 90-95 percent of the death benefit.

Please send your insurance questions to Insurance Commissioner John Oxendine, 716 West Tower, 2 Martin Luther King Jr. Drive, Atlanta, GA 30334. Or call 404-656-2070 (toll free at 1-800-656-2298), from 8 a.m. to 7 p.m.weekdays, for assistance with an insurance question.�Web address is www.gainsurance.org .