How long must a person wait before they can enter a viatical settlement contract?

In Montana, the waiting period before a person can enter into a viatical settlement contract is established as two years after the policy's issuance. This regulation is primarily in place to ensure that the policyholder has maintained the insurance and demonstrates a legitimate need for the settlement due to terminal illness or other qualifying medical conditions.

The rationale behind this two-year waiting period is to provide a buffer that prevents premature settlements, which could undermine the integrity of the life insurance system. It encourages policyholders to utilize their life insurance for its intended purpose—providing financial protection for beneficiaries in the event of death—before considering selling their policy for immediate cash.

Understanding this framework is crucial for those studying for the Montana State Life Insurance Practice Exam, as it reflects both regulatory compliance and ethical considerations in the insurance industry.