Life License Qualification Program (LLQP) Practice Exam

What can a life insurance policy owner sell their policy to in order to receive a percentage of its face value?

1. Broker

2. Insurer

3. Viatical settlement provider

4. Viator agent

The correct answer is: Viatical settlement provider

A life insurance policy owner can sell their policy to a viatical settlement provider to receive a percentage of its face value. This process allows policyholders, particularly those with terminal illnesses, to convert their life insurance into immediate cash. The viatical settlement provider purchases the policy at a value less than its face amount, but more than the cash surrender value, providing the seller with a lump sum payment. This arrangement is beneficial for individuals who may need funds for medical expenses or other urgent needs, as they can obtain cash before their passing rather than waiting for the death benefit to be paid out to beneficiaries. The viatical settlement provider then continues to pay the premiums and ultimately collects the death benefit upon the insured's passing. In contrast, the other options involve different entities or concepts that do not facilitate the sale of a life insurance policy for cash value. A broker typically acts as an intermediary in selling or managing insurance policies but does not buy policies directly from owners. An insurer refers to the company that issues the policy, which generally isn’t involved in purchasing policies from policyholders. A viator agent represents the policy seller in a viatical settlement but does not purchase the policy outright. Thus, the most accurate option for selling a life