The options that allow benefits to be paid other than lump sum are called what?

• A. Annuity Options
• B. Settlement Options
• C. Cash Surrender
• D. Premium Options

Answer: (B)

Settlement options refer to the ways life insurance proceeds can be paid out other than a single lump sum. When a death benefit is paid, beneficiaries can choose options that provide installments or lifetime income instead of one immediate payment. These options include things like life income (payments for the beneficiary’s lifetime), fixed-period payouts (payments for a set number of years), fixed-amount payouts (a set dollar amount each period), or an interest-only option, among others. The choice can affect how long money lasts and how much is ultimately received, because interest and guarantees come into play.

Annuity options pertain to payout choices for annuities, not to how life insurance proceeds are settled. Cash surrender is the option to surrender a policy for its cash value, which is a different non-lump-sum path. Premium options aren’t a standard term in this context.