A viatical settlement is basically cash paid out to a terminally ill patient in exchange for their life insurance policy's death benefits. The seller transfers all policy ownership rights and obligations to the buyer in exchange for a percentage of the policy's face value.
In short, a viatical settlement policy is an asset that the insured has the right to sell. But note once a life insurance policy is sold, the original beneficiaries will not be entitled to any proceeds upon the insured's demise. If this concerns you then you should take legal advice before agreeing to a viatical settlement.
