Which of the following is NOT true of life settlements?

In the context of life settlements, it is not accurate to state that the seller must be terminally ill. Life settlements involve the sale of a life insurance policy by the policyholder to a third party, where the seller receives a lump sum that is more than the cash surrender value but less than the death benefit.

The other statements clarify important criteria of life settlements. The requirement that the policy must be a whole life insurance policy is essential because life settlements typically involve permanent life insurance, which has a cash value component. Additionally, it is necessary for the buyer to be a licensed investor or provider to ensure that they comply with regulatory standards and ethical practices in the purchase of life insurance policies. Furthermore, the stipulation that the seller must have owned the policy for at least two years is a common requirement to prevent fraud and ensure that policies are not purchased solely for the purpose of profiting from the insured's death shortly after the sale.

Thus, the assertion that the seller must be terminally ill is incorrect and does not reflect the broader criteria under which life settlements operate. Life settlements can involve individuals who are healthy, elderly, or otherwise do not have terminal illnesses.