Which of the following statements regarding viatical settlements is INCORRECT?

A. A viatical settlement is a purchase of an existing policy.
B. The insured must be terminally ill when this transaction is conducted.
C. Viators receive the full face amount of the policy.
D. Insurable interest is not required in this transaction.

Question

18-07-2024
Business

Answered

Which of the following statements regarding viatical settlements is INCORRECT?

A. A viatical settlement is a purchase of an existing policy.
B. The insured must be terminally ill when this transaction is conducted.
C. Viators receive the full face amount of the policy.
D. Insurable interest is not required in this transaction.

Answer :

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GinnyAnswer GinnyAnswer · Answer 1 · 2024-07-18T19:17:48-04:00

Final answer:

Viatical settlements involve the sale of life insurance policies by terminally ill individuals, insurable interest is required, and the sellers receive a portion of the policy value.

Explanation:

Viatical settlements involve the sale of an existing life insurance policy by a terminally ill individual to a third party, who becomes the new owner and beneficiary of the policy. Insurable interest is required in viatical settlements, contrary to the statement in option D. Viators, those selling their policies, receive a sum less than the full face amount of the policy, usually a percentage of it.

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