Which contract allows a policy owner to receive a portion of the death benefit before the insured dies?

• A. Viatical Settlement Agreement
• B. Endowment policy
• C. Annuity
• D. Beneficiary assignment

Answer: (A)

Accessing part of the death benefit before the insured dies is possible through a viatical settlement arrangement. In this setup, the policy owner sells the life insurance policy to a third party (the viatical settlement provider) and receives a cash lump sum now. The purchaser becomes the new owner and beneficiary, takes over premium payments, and will receive the death benefit when the insured dies. The amount paid upfront is typically less than the full death benefit, reflecting the time value and the insured’s life expectancy.

This differs from an endowment policy, which pays out at a specified term or on death, not as a negotiated pre-death cash sale. An annuity provides periodic payments during the annuitant’s lifetime rather than a death benefit. Beneficiary assignment simply changes who would receive the death benefit, not provide early access to a portion of it.