Agreements made by terminally ill persons to sell their life insurance policies at a discount to pay for medical expenses are known as what?

Life settlements refer to agreements in which terminally ill individuals sell their life insurance policies to third parties for a lump-sum payment that is less than the death benefit but more than the cash surrender value. This transaction provides the sellers with immediate cash, which they can use to cover medical expenses or other financial needs that arise from their health condition.

The nature of this arrangement allows policyholders to capitalize on their life insurance while they are still alive, rather than waiting for the policy to pay out upon death. This can be particularly beneficial for those facing terminal illnesses, as it provides necessary funds at a critical time.

In contrast, other options listed do not accurately encompass this concept. For instance, insurance assignments involve transferring rights to a policy rather than selling it outright. Policy loans allow policyholders to borrow against the cash value of their life insurance rather than selling the policy. Beneficiary contracts pertain to the designation of individuals who will receive the death benefit upon the insured's passing, which is unrelated to selling the policy.