A viatical settlement is a process by which a terminally ill individual can sell his life insurance policy to an investor who pays the insured a discounted face value and then collects the policy benefit upon the insured’s death. This article analyzes and evaluates the legal problems that have arisen in connection with viatical settlement. By analyzing the definition, function, and characteristics of viatical settlement, this article has found that viatical settlement is not only one of securities but classifying as one of so-called “asset-backed securitization” regulated under “Financial Asset Securitization Act of Taiwan”. Finally, this article will offer some suggestions for the formation of a supervisory system for viatical settlement transaction based upon previous discussion.