#1
What is a life settlement?
A financial transaction where a policyholder sells their life insurance policy to a third party
ExplanationPolicyholder sells life insurance policy to third party.
#2
What is the primary reason someone might consider a life settlement?
To receive a lump sum cash payment
ExplanationTo receive lump sum cash payment.
#3
Which factor typically determines the value of a life settlement?
The policyholder's age and health
ExplanationValue determined by policyholder's age and health.
#4
What is the 'life settlement broker' responsible for in the life settlement process?
Negotiating the sale of the policy
ExplanationResponsible for negotiating policy sale.
#5
What is the 'insurable interest' requirement in life settlements?
The policyholder must have a financial interest in the continued life of the insured
ExplanationPolicyholder must have financial interest in insured's life.
#6
What is the 'two-year contestability period' in the context of life insurance policies?
A period during which the insurance company can contest the policy's validity
ExplanationPeriod for contesting policy's validity by insurance company.
#7
What is the viatical settlement industry related to?
Selling life insurance policies of terminally ill individuals
ExplanationSelling policies of terminally ill individuals.
#8
In a life settlement, who is the typical buyer?
A third-party investor or company
ExplanationTypical buyer is third-party investor or company.
#9
What happens if the insured person outlives the life expectancy predicted during a life settlement?
The buyer receives additional payments
ExplanationBuyer receives additional payments if insured outlives expectancy.
#10
How are life settlements regulated?
Through state regulations
ExplanationRegulated through state regulations.
#11
What is the key distinction between a life settlement and a viatical settlement?
The health condition of the insured
ExplanationKey distinction is insured's health condition.