State RegulationsNC specificDifficulty 2/5
Which of the following transactions is a viatical settlement under North Carolina insurance law?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under G.S. 58-58-205(11), a viatical settlement is an agreement by an owner of a life insurance policy — typically one covering an individual with a life-threatening or chronic illness or condition — to sell or assign the policy to a viatical settlement provider for an amount less than the policy's death benefit. The provider becomes the new owner and beneficiary and profits from the difference; the insured gains immediate funds instead of holding the policy to maturity.
Why the other options are wrong
- A) Surrendering to the issuing insurer is a contractual right against the carrier, not a sale to a third-party settlement provider.
- C) A policy loan creates a debt against the cash value while the owner keeps the policy; nothing is sold or assigned.
- D) Conversion under a group contract's conversion privilege is an insurer-offered option, not a viatical sale to a provider.
Memory hook
Viatical = sell the policy for less than the face, while still alive.