Viatical and Life Settlements is the purchase of existing life insurance policies for cash. Most states regulate the business of Viatical and Life Settlements. Texas, for example, requires licensure with detailed annual filings of all business activities.
A Policy Put Option can be established whereby the owner of a life insurance policy has the option, but not the obligation to sell the policy at a predetermined price at a future point in time. The owner has total optionality. This gives the owner of the policy the best of both worlds. If they choose to keep the policy and not exercise the option, the option will simply expire.
A Policy Put Option offers comfort and reassurance to the owner that in the event circumstances change and they no longer require the policy then can exercise the option and receive a sum greater than premiums paid. Estimated cost of the option is 1% of the face amount of the policy.