What is the term for a written agreement that allows a life insurance policyowner to receive immediate cash for their policy?

The term that refers to a written agreement allowing a life insurance policyowner to receive immediate cash for their policy is known as a viatical settlement. This arrangement specifically involves the sale of a life insurance policy by someone who is critically ill and expects to pass away within a certain time frame. The policyowner receives a lump sum payment that is typically less than the full death benefit but more than the cash surrender value of the policy.

Viatical settlements are designed to provide financial relief for individuals facing terminal illnesses, allowing them to access the value of their life insurance while still alive. This can be crucial for covering medical expenses, living costs, or other financial needs during a difficult time.

In contrast, other options relate to different concepts within life insurance. A life settlement generally refers to the sale of a policy by an insured who is not necessarily terminally ill, while a policy loan allows the policyholder to borrow against the cash value of their policy, which must be repaid with interest. A cash value agreement isn't a recognized term in the context of life insurance and does not accurately describe any specific financial arrangement associated with life insurance policies.