Ohio Insurance Laws and Regulations Practice Exam

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Prepare for the Ohio Insurance Laws and Regulations Exam. Dive into essential topics with detailed practice questions designed to enhance your knowledge and readiness. Ace your exam and ensure your success in the insurance field!

Practice this question and more.

Terminally-ill life insurance policy owners may sell their policy at a discount to a third party. What is this type of agreement called?

Life settlement
Viatical settlement
Policy loan
Annuity conversion

The correct answer is: Viatical settlement

A life settlement is a type of agreement where a policy owner sells their life insurance policy to a third party at a discount. This allows the policy owner to receive a lump sum of money instead of continued payments from the insurance company. Option A is incorrect because a life settlement specifically refers to agreements for terminally-ill individuals. This is in contrast with viatical settlements which are for individuals with chronic or life-threatening conditions. Option C, policy loans, refer to borrowing money from a life insurance policy and does not involve selling the policy. Option D, annuity conversion, refers to converting a lump sum of money into a series of payments over a longer period of time and is not related to life insurance policy agreements.