What is typically the amount received for a life insurance policy in a viatical settlement?

In a viatical settlement, the amount received for a life insurance policy is typically less than the death benefit. This occurs because the policyholder sells their life insurance policy to a third party for a lump sum payment while they are still alive, usually at a time of terminal illness. The amount offered in a viatical settlement is often calculated based on the insured's life expectancy, medical condition, and the present value of the death benefit.

The buyer of the policy assumes the responsibility of paying future premiums and ultimately receives the full death benefit upon the insured's passing. Thus, to compensate for the risk they are undertaking, the buyer will pay less than the face value of the policy. This arrangement is beneficial to the seller, as it allows them to access funds for immediate needs rather than waiting for the death benefit to be paid out after their death.