Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A beneficiary who chooses the "life income" settlement option will receive:
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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 periodic income guaranteed for the rest of the beneficiary's life, calculated using life expectancy. Because the insurer takes the risk that the beneficiary lives longer than expected, the payment is based on mortality assumptions. Alternatives include the lump sum, fixed amount, fixed period, and interest-only options. The life income option protects against outliving the proceeds, unlike a fixed-period option that stops when the period ends even if the beneficiary is still alive.
Why the other options are wrong
- B) A single payment is the lump-sum option, not life income.
- C) Interest-only pays income from the interest earned while the principal is preserved for later distribution.
- D) Equal installments for a set number of years is the fixed-period option, which can stop while the beneficiary still lives.
Memory hook
Life income = payments until you die; fixed period = payments until the clock runs out.