State RegulationsCO specificDifficulty 2/5
A beneficiary in Aurora elects in writing to receive the death benefit as monthly installments rather than a lump sum. Under C.R.S. § 10-7-112, what interest is the insurer required to pay on the proceeds?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under C.R.S. § 10-7-112, no interest is required when the beneficiary elects in writing a non-lump-sum settlement option. The interest rules protect beneficiaries who are awaiting a lump sum, so a written election to receive installments removes the insurer's interest obligation on the proceeds.
Why the other options are wrong
- B) The federal discount rate plus 2 percentage points applies to unpaid lump-sum proceeds, not to a written settlement-option election.
- C) There is no 10% annual interest rule for elected settlement options under C.R.S. § 10-7-112.
- D) The 30-day window defines the lump-sum interest period; it does not apply to a written election of installments.
Memory hook
Choose installments in writing — interest steps aside under 10-7-112.