Washington Life Producer Practice Exam

A viatical settlement agreement allows a policyowner to sell their life insurance policy for a percentage of the death benefit while they are still alive, typically in cases where they are terminally ill and have a limited life expectancy. This type of contract facilitates access to funds for medical expenses or other needs.

In contrast, a life settlement contract generally refers to the sale of a life insurance policy by an insured individual who may not necessarily be terminally ill, but is looking to convert the policy into cash. A term insurance agreement does not provide any death benefits prior to the insured's death, making it unsuitable for this context. Similarly, while a whole life policy builds cash value, it does not inherently allow for a pre-death payment of death benefits in the same way a viatical settlement does.

Thus, the viatical settlement agreement is specifically designed for accessing death benefits while still living under certain conditions.