In a viatical settlement, which of the following is true?

In a viatical settlement, policy owners who are terminally ill can sell their life insurance policies for a lump sum payment that is greater than the cash surrender value but less than the death benefit. This arrangement allows them to access their benefits while still alive, which can be crucial for covering medical expenses or other financial needs during their remaining life.

The other choices do not accurately represent the nature of viatical settlements. For instance, an insurer does not pay the settlement to policy owners while they are alive; rather, the insurer pays the death benefit to the new owner upon the insured's death. Additionally, while proceeds from a viatical settlement may be exempt from federal income tax under certain conditions, they are not universally tax-free in all situations. Lastly, viatical settlements typically do not require approval from all beneficiaries, allowing the policy owner to make the decision independently, making the correct choice about immediate access to benefits while alive.