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viatical settlement

“An additional way for life insurance policyholders to access the value of the policy is the option to sell the policy to a third party, which is often called a viatical settlement. After purchasing the policy, the third party becomes responsible for paying the premiums and will receive the death benefit when the insured dies.”

Q1: After selling the policy to a third party, the sell proceed belongs to the original policy beneficiary or the original policy owner?

Q2: After purchasing the policy, the third party becomes responsible for paying the premiums and will receive the death benefit when the insured dies. Who will be the insured? The original insured under the previous policy or the new insured appointed by the third party who will be the new policy owner?

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A1: The original policyholder.  That may be the insured, or it may be the original beneficiary, or it may be someone else.  It’s whoever owns the original policy.

A2: Who is insured doesn’t change.  A policy on your life is a policy on your life, irrespective of who owns that policy.

Simplify the complicated side; don't complify the simplicated side.

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Thank you.

You’re welcome.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/