Another type of transaction, often called a “life settlement,” is the sale of a life insurance policy to a third party, where the insured individual does NOT have a known life-threatening or terminal illness or condition. In these cases the policy owner also receives cash for the policy.
There has been a growing market for the purchase and sale of policies that do not meet the traditional definition of a viatical settlement. Typically these transactions involve life insurance policies of a large face amount (often $250,000 or more), or involve “key-person” coverage or corporate owned life insurance or policies representing excess coverage that is no longer needed. These transactions are generally not regulated by most states’ viatical laws, therefore the limited licensing and disclosure requirements of viatical transactions would not apply.
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