What should insurers do when making a viatical settlement?

When making a viatical settlement, insurers should provide accelerated death benefits directly to the policyholder. Viatical settlements typically involve a terminally ill policyholder selling their life insurance policy to a third party for a lump sum that is less than the policy's death benefit. By offering accelerated death benefits directly, insurers assist policyholders in accessing a portion of their death benefits while still alive, which can help cover medical expenses or other needs during their illness.

This approach aligns with the nature of viatical settlements, where the goal is to provide financial support to individuals facing dire health circumstances before their death. It also reflects the ethical responsibilities of insurers to prioritize the fair treatment of policyholders in vulnerable situations.

In contrast, the other options do not fit within the typical framework of viatical settlements. For instance, charging lower premiums is unrelated to the settlement process, funding through third parties involves additional complications, and utilizing mortality and morbidity tables is more relevant to underwriting and risk assessment rather than the specific action taken during a viatical settlement.