Licensed senior settlement companies purchase unwanted policies from senior citizens and sell them to other interested groups. Other functions of their business include converting the policies to meet to current needs, inviting bids and compensating the seniors with lump sum amounts in cash. Once the policy is purchased by the company from the original policy holder, the company is responsible for all further premiums on that policy.

The departments of insurance have to approve the senior settlement companies in their operating states. All rules are set by the National Association of Insurance Commissioners and are bound by the rules laid forth in the Viatical Settlement Act of 2001.

People generally find that dealings with a licensed senior settlement company are safe and secure. The odds of being defrauded are negligible. The rules are now strictly enforced since many cases of senior settlement scams have been reported in the last decade.

All licensed senior settlement companies in the US operate under strict sets of rules. Their computations have to conform to national standards. Usually, they create an escrow account that keeps track of the current funds of the policyholder. That account would be active until the policy is sold to some other party.

However, there are many unlicensed companies functioning throughout the country. Policy holders are advised to deal with them at their own risk. Many unaccredited companies discard their businesses and leave their senior customers behind, with no options, as a result. It is advisable that you check whether the settlement company is authorized by the state's Department of Insurance.