Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
A beneficiary elects a settlement option that guarantees a specific number of payments even if the beneficiary dies before the period ends, but pays less per month than a straight life option. This option is the:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The life income with period certain option pays income for the beneficiary's lifetime but guarantees a minimum number of payments, such as 10 or 20 years certain. If the beneficiary dies before the certain period ends, the remaining payments go to a contingent payee. Because the insurer guarantees at least a minimum payout, the monthly amount is lower than under a straight life option, which stops at death with no guarantee. The fixed period option is not life-contingent, and interest only leaves the principal intact.
Why the other options are wrong
- B) Straight life income pays the highest monthly amount but stops at the beneficiary's death with no guaranteed minimum, the opposite of a guaranteed number of payments.
- C) A fixed period option pays installments for a set number of years regardless of life, but it is not a life-contingent income stream.
- D) Interest only pays interest while the proceeds stay invested and the principal remains intact until a later election.
Memory hook
Period certain = you get paid even if you die early; straight life = stop at the grave.