When an unrelated third party buys a life insurance policy from a terminally ill individual, it is known as a viatical settlement. This allows the policy owner to receive a lump sum payment while they are still alive, providing financial relief for medical expenses. In return, the third party becomes the new beneficiary and receives the payout upon the death of the original policy owner. This practice has sparked ethical debates in the financial industry due to the potential exploitation of vulnerable individuals.
