Which statement correctly describes a fixed period settlement option?

Which statement correctly describes a fixed period settlement option?

• A. It guarantees payments for a fixed period to a named beneficiary
• B. It pays a lump sum immediately
• C. It provides payments for the life of the insured only
• D. It requires the insured to choose a variable payment amount

Answer: (A)

This question tests how a fixed period settlement option works. Under this option, the death benefit is paid out in installments over a preselected number of years. The payments are guaranteed for that fixed period to the named beneficiary, regardless of whether the insured or beneficiary dies during the period. If the insured dies early, the remaining installments continue to be paid to the beneficiary for the rest of the specified time. This option is not a lump-sum payout, nor is it a life-long payment tied to the insured’s or recipient’s lifespan, and the payments aren’t meant to vary over time.

This question tests how a fixed period settlement option works. Under this option, the death benefit is paid out in installments over a preselected number of years. The payments are guaranteed for that fixed period to the named beneficiary, regardless of whether the insured or beneficiary dies during the period. If the insured dies early, the remaining installments continue to be paid to the beneficiary for the rest of the specified time. This option is not a lump-sum payout, nor is it a life-long payment tied to the insured’s or recipient’s lifespan, and the payments aren’t meant to vary over time.