Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A settlement option that pays the beneficiary income for as long as the beneficiary lives, with payments ceasing at death, is the:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The life income option converts the death proceeds into a stream of payments that continue as long as the beneficiary lives, guaranteeing that the beneficiary cannot outlive the income. The amount is determined by the proceeds, the interest assumption, and the beneficiary's life expectancy. It addresses the risk of the beneficiary exhausting the proceeds too early. Fixed amount and fixed period options instead end when a set dollar total or time span is reached, regardless of how long the beneficiary lives, and a lump sum pays everything at once.
Why the other options are wrong
- B) The fixed amount option pays a set dollar amount each period until the funds are exhausted, with no guarantee that payments will continue for the beneficiary's lifetime.
- C) The lump-sum option pays the entire proceeds in one payment immediately after death, leaving no income stream for the beneficiary to live on.
- D) The fixed period option pays over a stated number of years and stops when that period ends, even if the beneficiary is still alive. Life income continues as long as the beneficiary lives.
Memory hook
Life income: the check keeps coming while the beneficiary keeps breathing.