S is a life insurance policyowner who enters into a written agreement to receive immediate cash in exchange for the sale and transfer of her life insurance policy. This agreement is referred to as a?

The correct answer is a viatical settlement because it specifically refers to an arrangement where a policyowner sells their life insurance policy to a third party for immediate cash, often at a discount to the policy's face value. This practice is generally conducted by individuals who are terminally ill or have a chronic illness and need immediate funds to cover medical expenses or other urgent financial needs. The transaction allows them to access cash from a policy that they may not otherwise have the ability to utilize, making it particularly beneficial in times of financial distress.

In contrast, a 1035 Exchange pertains to the tax-free exchange of one life insurance policy for another of similar type, which does not involve converting the policy to cash immediately. An equity cash arrangement might imply borrowing against the policy's cash value but does not specifically denote the outright sale of the policy. Cash conversion similarly suggests accessing funds but lacks the precise legal and financial implications associated with a viatical settlement. Therefore, choosing viatical settlement accurately captures the nature of the transaction described in the question.