When the owner of a life insurance policy transfers ownership to a third party in return for payment of a large percentage of the death benefit, this is known as

This option allows policyholders to receive a portion of their death benefit while still alive, usually due to a terminal illness diagnosis. However, it does not involve selling the policy to a third party; rather, it provides immediate financial support from the insurance company itself.

A spendthrift clause is a provision in a trust or insurance policy that prevents beneficiaries from selling or transferring their rights to the benefits. It is designed to protect the proceeds from creditors and ensure that beneficiaries cannot squander the funds. This concept is unrelated to the transfer of ownership of a policy for payment.

A grace period is the time allowed after a premium due date during which a policyholder can still make a payment without losing coverage. This term relates to maintaining the policy rather than transferring ownership or selling it for cash.