Washington Life Producer Practice Exam

A policyowner can receive a percentage payment of the death benefits prior to death by using what kind of contract?

1. Viatical settlement agreement

2. Life settlement contract

3. Term insurance agreement

4. Whole life policy

The correct answer is: Viatical settlement agreement

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.