State RegulationsFL specificDifficulty 1/5
Which of the following is a settlement option for paying life insurance death proceeds?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under Chapter 627, Florida Statutes, settlement options govern how the insurer distributes death proceeds: lump sum, interest only, fixed amount, fixed period, and life income. The other three choices are nonforfeiture options, which apply when a living policyowner stops paying premiums - a different part of the policy's architecture entirely. Keeping the two families of options straight is essential.
Why the other options are wrong
- B) Reduced paid-up is a nonforfeiture option for a living policyowner, not a method of paying proceeds.
- C) Extended term is likewise a nonforfeiture option.
- D) Cash surrender is a nonforfeiture option that ends the policy for its equity.
Memory hook
Settlement options pay OUT at death; nonforfeiture options rescue a living policy.