Life License Qualification Program (LLQP) Practice Exam

To receive a percentage of the policy face value, an owner of a life policy may sell the policy to a(n)...

1. Viatical settlement provider

2. Insurance company

3. Viator

4. Insured

The correct answer is: Viatical settlement provider

The correct answer is that the owner of a life policy may sell the policy to a viatical settlement provider. A viatical settlement is a transaction in which a policyholder sells their life insurance policy to a third party for a lump sum payment that is less than the policy’s death benefit but more than its cash surrender value. This is often done by individuals who are terminally ill and need access to funds for medical expenses or other needs. Viatical settlement providers specialize in purchasing these types of policies and are equipped to handle the complexities of this transaction, including assessing the value of the policy based on the insured's life expectancy and the policy's terms. This allows policyholders to leverage the value of their life insurance policy in a practical way. The other options are not relevant in this context. An insurance company typically does not buy policies from policyholders in this manner; rather, they issue and maintain policies. A viator refers to the individual insured under the policy and is often the one who receives the death benefit, not the one the policy is sold to. The term insured refers to the person covered by the life insurance policy, which does not apply to the selling process. Therefore, the viatical settlement provider is the appropriate choice