What type of settlement allows someone with a life-threatening condition to sell their life insurance policy?

The correct response is viatical settlement. This type of settlement is specifically designed to assist individuals who have a terminal or life-threatening illness and need immediate cash. In a viatical settlement, the policyholder sells their life insurance policy to a third party for a lump sum that is less than the policy's death benefit but allows them to access funds while they are still alive. This can be an essential financial resource for covering medical bills, living expenses, or other costs associated with their condition.

Viatical settlements are unique because they provide a viable option for people facing severe health challenges, unlike general life settlements which can be utilized by individuals regardless of their health status. Understanding the specific purpose and conditions of a viatical settlement is crucial for navigating the options available to those with terminal illnesses.