Retirement and Other Insurance Concepts
Which fact most clearly separates a life settlement from a viatical settlement?
Answer and explanation
Answer: D. Both are sales of an in-force policy to a third party. The viatical label applies when the insured is terminally or chronically ill, which shortens life expectancy and raises the price the buyer will pay.Source: NAIC Life Insurance Buyer's Guide — Life and viatical settlements compared
More retirement and other insurance concepts questions
- How does a business use the death benefit it receives from a key person policy?
- How does an entity-purchase buy-sell plan differ from a cross-purchase buy-sell plan in a multi-owner corporation?
- How is a life settlement generally taxed to a seller who is not terminally ill?
- How is annual interest or cash value growth within a permanent life insurance policy taxed while it remains inside the contract?
- If a group life insurance master policy is TERMINATED by the employer, what conversion right do employees covered for at least 5 years possess under TIC § 1131.110?
- If a policy becomes a MEC, how are loans and partial withdrawals taxed under IRC rules?
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