Florida's viatical rules are not the same as everyone else's
We are based in Pompano Beach, and the state's treatment of viatical settlements differs from the model most states follow. What that means if you live here.
The model act most states follow
Most states regulate life settlements under some version of the NAIC Life Settlements Model Act, which treats life settlements and viatical settlements as two distinct categories. A life settlement is a sale by someone who is not terminally ill. A viatical settlement is a sale by someone with a terminal or chronic illness and a life expectancy typically under two years.
Under the model act, both types require a licensed provider and a licensed broker. The seller has a rescission right. Disclosures are mandated. The framework is similar; the categories are separate.
What Florida does differently
Florida regulates viatical settlements under Chapter 626 of the Florida Statutes, and the definition is broader than the model act. Florida defines a viatical settlement contract as any agreement under which a viator — the policy owner — receives consideration less than the expected death benefit in exchange for the policy. The life expectancy threshold is 24 months, consistent with the model act, but the licensing and disclosure requirements apply to both life settlements and viatical settlements under the same statutory framework.
Florida also requires that viatical settlement providers and brokers be licensed with the Florida Department of Financial Services. A provider licensed in another state is not automatically permitted to operate here. If you are a Florida resident and someone is offering to buy your policy without a Florida license, that is a compliance problem on their end — and a reason to ask questions.
The tax treatment question
Federal tax law treats viatical settlement proceeds differently from life settlement proceeds when the insured has a terminal or chronic illness. Under IRC Section 101(g), proceeds from a viatical settlement may be excludable from gross income if the insured is terminally ill (life expectancy of 24 months or less) or chronically ill (unable to perform two or more activities of daily living).
Florida has no state income tax, so the state-level question does not arise here. But the federal exclusion is not automatic — it depends on the insured's condition at the time of the sale, the certification requirements, and whether the buyer qualifies as a viatical settlement provider under federal law. This is a question for a tax adviser, not a settlement broker.
The rescission period in Florida
Florida gives sellers 15 days to rescind a completed viatical or life settlement after the later of the date the contract is executed or the date the seller receives the proceeds. That is shorter than the 30 days some other states provide.
Know the exact date your rescission period expires before you sign. Once it passes, the transaction is final.
What this means practically
If you are a Florida resident with a terminal or chronic illness diagnosis, you may be looking at a viatical settlement rather than a life settlement. The process is similar, the documentation requirements are similar, and the market is the same institutional buyers. The differences are in the licensing requirements on the provider side, the potential federal tax treatment, and the rescission window.
We work with licensed Florida providers and brokers. If your situation involves a terminal or chronic illness diagnosis, that is the first thing to say when we talk — it changes which part of the market your policy goes to.
Larry Hoffman
Larry Hoffman has spent over 20 years in legal funding and commercial lending. He runs Zen Cash, which reviews life insurance policies and refers qualified ones to a licensed life settlement broker. Zen Cash does not buy policies and is not a licensed broker. More about how this works.
You can stop at any point.
Nothing here obligates you to sell. One short conversation tells you whether your policy has value, and if it does not, you will know within a day.