Final Answer:
Someone who owns a life insurance policy, has a life-threatening illness, and sells the death benefits is a viatical settlement provider.
Explanation:
This individual is engaging in what is known as a viatical settlement, a financial transaction where a person with a life-threatening illness sells their life insurance policy to a third party, typically a viatical settlement provider, in exchange for a lump sum payment that is less than the policy's death benefit. This allows the policyholder to access funds while alive rather than waiting for the death benefit to be paid out to beneficiaries after their passing.
Viatical settlements became more prevalent during the HIV/AIDS crisis in the 1980s when patients facing terminal illnesses needed financial support for medical care and living expenses. This practice provides immediate financial assistance to policyholders who may require funds for medical treatments, bills, or quality-of-life improvements while they are still alive.
By selling the death benefits, the policyholder forfeits their rights to the insurance payout upon their death, and the viatical settlement provider becomes the beneficiary of the policy. The provider assumes the responsibility of paying the policy premiums and eventually collects the death benefit upon the policyholder's passing.
Viatical settlements offer a way for individuals with life-threatening illnesses to access financial resources to alleviate their immediate needs. However, it's crucial to consider the potential drawbacks, including the reduced payout compared to the policy's face value and the implications for beneficiaries who might rely on the death benefit for financial security. ""