Illinois Insurance State Practice Exam

Viatical settlements are financial arrangements specifically designed to assist terminally ill individuals. These settlements allow such individuals to sell their life insurance policies for a lump sum that is typically less than the policy's face value but considerably more than the cash surrender value. This arrangement provides immediate cash that can be used for medical expenses, living costs, or any other needs during a difficult time.

In the context of the other options, the focus on terminally ill persons is crucial because viatical settlements are tailored to their unique circumstances, ensuring they receive financial support while facing the challenges associated with a terminal diagnosis. The other options do not align with the primary purpose of viatical settlements, which is to support individuals in critical health situations, making this the most accurate choice.