Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
A beneficiary wants the death benefit paid out in installments that will continue for the rest of the beneficiary's lifetime, no matter how long the beneficiary lives. Which settlement option best fits this goal?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The life income option pays the beneficiary a guaranteed income for life, with payments ending at death. It can be selected alone or with a guarantee period (for example, life with 10 years certain). The life income option provides longevity protection that no other settlement option offers, because the fixed amount and fixed period options exhaust the fund regardless of how long the beneficiary lives.
Why the other options are wrong
- B) The interest-only option pays just the interest and holds the principal, which does not guarantee lifetime income payments.
- C) The fixed amount option pays a set dollar amount until the principal and interest run out; the beneficiary can outlive it.
- D) The lump sum option pays the entire benefit at once, with no stream of lifetime income.
Memory hook
Life income = a paycheck that cannot be outlived. Payments stop only at death, no matter how far away that is.