Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A beneficiary chooses a settlement option that will pay income for as long as the beneficiary lives, with payments ceasing at death. This option is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The life income option guarantees payments for the beneficiary's entire lifetime; payments stop when the beneficiary dies. This creates the risk that the beneficiary may die early and receive relatively few payments, but it is the only settlement option that provides a true lifetime income guarantee. The fixed-period option pays over a stated number of years regardless of lifespan, the interest-only option pays only the earnings on the principal while preserving it, and the lump-sum option pays the entire proceeds at once.
Why the other options are wrong
- B) The fixed-period option pays equal installments over a set number of years and stops at the end of the period, regardless of the beneficiary's lifespan.
- C) The interest-only option pays only the interest earned on the proceeds and preserves the principal for a later payment.
- D) The lump-sum option pays the full proceeds in one payment and provides no ongoing income stream at all.
Memory hook
Life income = a paycheck for life. Die early and it ends; live long and it keeps coming.