Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
The insured selects a settlement option that pays the beneficiary a specific sum each month until the death proceeds and their interest are exhausted. This option is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under the fixed amount option, the beneficiary receives a set amount each month (for example, $1,000) until the principal plus earned interest is used up. The number of payments varies depending on the amount chosen, the interest rate, and how long the proceeds last. By contrast, the fixed period option pays over a set number of years, and the life income option pays for the beneficiary's lifetime.
Why the other options are wrong
- B) Fixed period pays a guaranteed amount over a chosen number of years, not a chosen amount each month until exhausted.
- C) Life income guarantees payments for the beneficiary's lifetime, based on life expectancy, not a fixed monthly sum until exhaustion.
- D) Interest only pays the beneficiary only the interest earned on the proceeds, leaving the principal intact.
Memory hook
Fixed amount = monthly allowance until the pot is empty. Fixed period = the pot divided by a set number of years.