A viatical settlement is the sale of a life insurance policy, typically to a third party, for immediate cash payment. The market emerged in 1989 in response to the AIDS crisis, but since then has diversified to the elderly and to other terminal ill patients. Despite the growing importance of this industry, no economic studies have been done. States have begun adopting regulation of the market despite little empirical information. The primary reason for the lack of scholarly attention is the absence of data - for example, neither the Health and Retirement (HRS) nor the Asset and Health Dynamics Among the Oldest Old (AHEAD) surveys contain questions regarding the use of viatical settlements. The purpose of this project is to investigate the economics of the viatical settlement market using a nationally representative sample of HIV infected adults.
The specific aims of this research project are as follows: 1. Empirically investigate the demographic, economic, and medical factors correlated with the decision to viaticate. 2. Compare outcomes in the viatical settlements market across states with differing regulatory structures. 3. Model and test for the presence of adverse selection in the viatical settlements market. 4. Suggest questionnaire items on viatical settlements for inclusion in the HRS and AHEAD surveys.
