How long must someone wait to enter a viatical contract unless certain criteria are met?

A viatical contract allows a terminally ill policyholder to sell their life insurance policy to a third party for a lump sum benefit, typically at a reduced amount compared to the policy's death benefit. The purpose of waiting a specific duration before entering into a viatical contract is primarily to prevent abuse of the system and to ensure that the policyholder genuinely requires financial assistance due to critical health conditions.

In Maine, as well as in many other jurisdictions, the standard waiting period before entering a viatical settlement is generally set at two years. This duration allows insurers to manage the risk related to the policy effectively while confirming that any changing health status justifies the viatical process. If certain conditions are met, such as the diagnosis of a terminal illness, individuals may qualify for a viatical settlement before reaching this two-year mark.

Understanding this period is crucial as it helps to protect both the consumers and the integrity of the life insurance industry by ensuring contracts are made when there is a legitimate need due to severe health circumstances.