What type of settlement allows a terminally ill individual to sell their life insurance policy at a discount to pay for medical bills?

The viatical settlement option is designed specifically for terminally ill individuals who wish to access their life insurance benefits prior to their death. This type of settlement allows these individuals to sell their life insurance policy to a third party for a percentage of its face value, enabling them to obtain cash that can be used to cover immediate expenses, such as medical bills and other costs associated with their condition.

Viatical settlements are particularly beneficial for those facing high medical expenses or financial difficulties due to serious illnesses, as they provide a way to convert an otherwise dormant asset (the life insurance policy) into readily available funds. This can alleviate financial strain at a critical time in their lives.

Other options such as accelerated benefits refer to provisions in a policy that allow policyholders to access a portion of their death benefit while still alive, but they typically apply under broader circumstances and are not specifically tailored for terminally ill individuals in the same way a viatical settlement is. Universal and term insurance refer to types of life insurance policies and do not relate to the selling of a policy for cash.