Which statement about life settlements is NOT true?

Life settlements refer to the sale of an existing life insurance policy by the policyholder to a third party for a lump sum payment, which is often more than the cash surrender value but less than the death benefit. The key characteristic of life settlements is that the seller does not need to be terminally ill; they can be in good health. This flexibility allows individuals to sell their life insurance policy for various reasons, such as financial need, changes in financial circumstances, or simply no longer wanting the coverage for whatever reason.

Other options correctly reflect characteristics of life settlements. They can indeed involve key person coverage, which is a policy taken out on individuals critical to a business. It's also possible for life settlements to occur on policies with significant face amounts, as these are more likely to attract buyers interested in a potentially larger return. Additionally, the nature of life settlements allows them to be sold for more than their current cash value, which makes them an appealing option for sellers who may need immediate cash.