What are agreements made by terminally ill persons to sell their life insurance policies for medical expenses called?

Agreements made by terminally ill persons to sell their life insurance policies for medical expenses are known as life settlements. This process allows individuals facing terminal illnesses to convert their life insurance policies into cash that can be used for immediate medical costs or other expenses, providing financial relief during challenging times.

Life settlements involve transferring the ownership of the policy to a third party in exchange for a lump sum payment that is typically more than the cash surrender value but less than the death benefit. The buyer then becomes responsible for paying the premiums on the policy and ultimately receives the death benefit when the insured passes away.

This financial arrangement is beneficial for those who need to cover significant medical bills and wish to access the funds that would otherwise remain untapped until after their death. Understanding life settlements is essential for both consumers and professionals in the insurance industry, as they represent an important option for individuals in need of financial assistance when facing terminal medical conditions.