Who are the parties involved in a life settlement contract?

In a life settlement contract, the parties involved are the policyowner and a third party. A life settlement involves the policyowner selling their life insurance policy to a third party for a cash value that is typically greater than the cash surrender value but less than the death benefit.

The third party becomes the new owner of the policy and assumes the responsibility for paying the premiums. This arrangement allows the policyowner to receive immediate funds while allowing the third party to potentially gain a profit upon the insured's death when they collect the death benefit.

The involvement of the insurer and the beneficiary does not fit this context, as they are not direct participants in the settlement transaction itself, rather they play roles in the original policy structure. Similarly, the relationship between the policyholder and the insurer primarily pertains to the original policy contract and not to the sale or transfer of a policy's benefits under a life settlement agreement. The last option, mentioning the insured and the state, does not accurately reflect the parties involved in life settlements either, as it misrepresents the contractual nature of a life settlement transaction.