Life Income Settlement Option

Guaranteed income for as long as the beneficiary lives — The life income option pays the beneficiary a guaranteed income stream for life, eliminating the risk of outliving the proceeds. The payment amount is based on the principal, the interest earned, and the beneficiary's life expectancy; the insurer pools the longevity risk so that payments continue even after the principal is exhausted. This option provides retirement-style financial security but forfeits the lump sum, and payments stop at death unless a period certain or refund feature is added. This longevity protection is especially valuable to a widow or widower who has no other guaranteed income and wants the proceeds converted into a dependable monthly retirement check.

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Periodic payments that are guaranteed to continue for the beneficiary's lifetime, even if the principal is exhausted — The life income option pays a guaranteed income for as long as the beneficiary lives, regardless of how long that is; the insurer bears the risk of outliving the principal. This is one of the settlement options listed in objective LIFE-II.E.9, along with lump sum, fixed amount, fixed period, and interest only. The insurer pools longevity risk to fund the lifetime guarantee.

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