What is the primary function of a viatical settlement?

A viatical settlement primarily serves the function of allowing policyholders, particularly those with terminal illnesses, to sell their life insurance policies to third-party investors for immediate cash. This financial option provides individuals the ability to access funds that can be used to pay for medical expenses, daily living costs, or other personal needs that may arise due to their health condition.

The nature of a viatical settlement directly addresses the urgent financial requirements of individuals facing severe health challenges. By converting a life insurance policy into cash, the policyholder can obtain necessary resources that can alleviate the financial burden associated with healthcare and living expenses during a difficult time. This distinguishes viatical settlements from other financial instruments that may focus on long-term growth, debt relief, or retirement funding, as those options do not specifically cater to the immediate financial needs that arise from serious health issues.