A life settlement option typically pays what type of cash settlement?

A life settlement option usually pays a lump sum cash settlement. This approach allows the policyholder to sell their life insurance policy to a third party for a one-time cash payment. The life settlement provides immediate financial value to the seller, as they receive the entire agreed-upon amount upfront rather than waiting for periodic payments or installments over time.

In a life settlement, the buyer assumes responsibility for the policy, including paying future premiums. This option can be particularly appealing for policyholders who no longer need their life insurance or wish to free up cash for other needs, as the lump sum payment can be used as they see fit.

Periodic payments, installments, or deferred payments are not typical characteristics of life settlements, as these options involve a spread-out payment approach rather than a single, immediate payout. Therefore, the lump sum nature of a life settlement aligns with the needs of policyholders looking for quick financial relief.