State RegulationsNC specificDifficulty 1/5
Under G.S. 58-58-205(11), which transaction is a viatical settlement?
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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 under which an insured with a life-threatening or terminal condition sells or assigns an existing life insurance policy for an amount less than the expected death benefit, typically to a viatical settlement provider. The seller converts the death benefit into immediate cash; the buyer becomes the beneficiary and collects the proceeds at death.
Why the other options are wrong
- A) A surrender of a lapsed policy back to the insurer is a cash-out, not a viatical settlement with a third party.
- C) A policy loan keeps ownership and the death benefit with the original policyholder.
- D) An exchange of policies is a replacement transaction governed by 11 NCAC 12 .0612, not a viatical settlement.
Memory hook
Viatical: sell the death benefit now, at a discount, because time is short.