4.2.6 Life Settlements
Life settlements are similar to viatical settlements except the policyowner is not necessarily terminally or chronically ill. In life settlements, a person's life insurance policy is sold to a third party for more than the policy's cash surrender value and less than its face value. Ownership and beneficiary rights are transferred to the new owner.
Certain disclosures must be made during the life settlement transaction process. However, there are privacy concerns and the insured's identity and personal financial and medical information should not be disclosed under certain circumstances (see pages 162 & 163, Florida study manual).
