A “viatical settlement” is the sale of a life insurance policy by someone with a life-threatening or terminal illness to a third party, for a lump sum that is less than the death benefit; the buyer takes over the premiums and receives the death benefit. Viatical settlement is mainly a US term. In Canada, the rules on selling a life insurance policy vary by province, and in Alberta only licensed life insurers may trade in life insurance policies (Insurance Act s. 784). For someone who is terminally ill, see accelerated death benefit.
Viatical settlement
The sale of a life insurance policy by someone with a terminal or life-threatening illness to a third party, for a lump sum below the death benefit.
Reviewed by Kyle Garrett, licensed insurance advisorLast reviewed October 2026. How we write
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