Although time is an issue, Peggy Wallace, president of Affirmative Life-styles in San Antonio, says that it's important to take the time needed to make the right decision. "This is a business decision about the management of an asset," says Wallace. She points out that a person facing terminal illness, in a sense, is someone thrown into premature retirement and who needs to consider four phases of financial life:
- Expense needs while working full time
- Expense needs while working at a reduced schedule
- Expense needs at partial disability
- Expense needs at full disability.
According to John Johnson, who is a Walnut Creek, California-based management consultant working with Affirmative Lifestyles, and Steven Simon, president of American Life Resources Life Corp. in Miami, there are other points human resources managers need to consider when they counsel a terminally ill employee. For example:
- It's common for a working individual who has a terminal illness to become too ill to continue working as early as two years before the end of life. This two-year window is the focus of financial planning for people who are terminally ill.
- Timely response is important to someone who's terminally ill. Step forward with the necessary communication to the insurance company to establish early in the conversation that the policy can be sold.
- If your employee-benefits package includes a group life insurance package, the policy probably includes clauses that preclude the individual's assigning the policy or naming anyone as an irrevocable beneficiary. In the majority of the cases in which the policy precluded these situations, however, viatical companies and employers have been able to persuade the insurer to offer special consideration to someone who has a terminal illness. It can be done.
- If the policy can't be sold in its present form, many benefits managers go up the chain of attorneys in their own companies or in the insurance companies to ensure that changes take place to allow employees to sell their policies. Have the changes made right away.
- Increasing numbers of insurance companies will pay accelerated benefits to people who have a terminal illness. Learn whether yours will. If it won't, learn why not.
- Advise the employee that, to avoid taxes on this kind of income, a close friend or relative with whom the employee can deal directly should be designated to buy the policy and then be named as its beneficiary.
- The best way you can help a person work through these negotiations with an insurance carrier is to understand the situation from his or her point of view. Imagine that you are the individual who has the terminal illness. You've worked hard and paid taxes all your life, you're in the prime of your life, and you don't want to go on public assistance. You want to maintain your dignity.
In closing, Johnson stresses that each person who becomes involved in a viatical settlement needs to ask who benefits. "Anything except a win-win outcome is unacceptable in this very sensitive field," he says.
Personnel Journal, January 1993, Vol. 72, No. 1, p.