Viaticals in the COVID-19 Pandemic Era

Viaticals are life insurance settlement contracts where the investor purchases a life insurance policy from a terminally ill policyholder. In these cases, the present value of the policyholder’s cash flows is substantially above the cash surrender value and below the face value of the policy. The COVID-19 virus (also referred to as SARS-CoV-2 or the coronavirus) has killed and shortened the expected lifespan of many victims, much like HIV-AIDS and other terminal illnesses. This paper suggests a valuation model for a life settlement contract as the framework to contrast the usefulness of viatical contracts during the current COVID-19 pandemic compared to the HIV/AIDS crisis. Contrasting the diseases leads us to believe that viaticals are less useful for dying COVID-19 victims, although they may prove useful for a subset of COVID-19 survivors who suffer life-shortening organ damage.