Which of the following is NOT one of the standard life insurance settlement options?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The standard settlement options for paying life insurance proceeds are lump sum, interest-only, fixed-amount installments, fixed-period installments, and life income. A guaranteed issue annuity is an annuity product issued without medical underwriting; it is not a method of settling death proceeds. Settlement options give the beneficiary flexibility in how the proceeds are received, and under California law (CIC Section 10170(f)) the beneficiary generally may choose among the available options, with a retained-asset account permitted as a default only with clear disclosure.
Why the other options are wrong
- B) Lump sum is the most common settlement option - an immediate single payment of the death benefit to the beneficiary.
- C) The interest-only option pays periodic interest while the principal remains with the insurer for later distribution.
- D) Fixed-period installments pay principal and interest over a set number of years.
Memory hook
Five standard exits: lump sum, interest-only, fixed amount, fixed period, life income.