Final answer:
The policyholder is the individual selling their life policy to a third party, and this transaction is usually termed as a viatical settlement.
Step-by-step explanation:
An individual wanting to sell their life policy to a third party is known as the policyholder. This transaction often happens in the form of a viatical settlement, where the policyholder sells their life insurance policy to a third party for less than the death benefit but more than the cash surrender value. The buyer, or viatical settlement provider, becomes the new beneficiary and is responsible for paying the policy's premiums. Upon the insured's passing, the viatical settlement provider receives the policy's death benefit. Typically, these types of arrangements are sought by the insured for immediate cash needs or if the insured no longer needs the policy. It's important to note that any loan from the insurance company against the policy must be repaid with interest.