What is the right of rescission regarding viatical settlements?

The right of rescission in the context of viatical settlements refers to the unconditional right to cancel or rescind the contract. This means that a policyholder can choose to back out of the agreement after it has been signed, usually within a specific timeframe. This is a critical consumer protection measure designed to ensure that individuals have the opportunity to reconsider their decision regarding the sale of their life insurance policy.

In a viatical settlement, the policyholder is effectively selling their life insurance policy to a third party before death, often due to terminal illness or need for immediate cash. The right of rescission allows individuals to ensure they are making an informed decision without pressure, recognizing that circumstances can change after the initial agreement is reached.

The other options do not accurately represent the idea of rescission. Adjusting premium payments, extending the settlement agreement, or requesting additional benefits do not encompass the concept of canceling the contract itself. Instead, rescission focuses solely on the consumer's ability to withdraw from the agreement without penalty, underlining the importance of transparency and choice in life insurance transactions.