What best describes the fixed-period settlement option?

What best describes the fixed-period settlement option?

• A. Benefits are paid in a single lump sum.
• B. Both the principal and interest will be liquidated over a selected period of time.
• C. Payments are made indefinitely until the policy expires.
• D. Only the principal is paid out while the interest stays in the policy.

Answer: (B)

The fixed-period settlement option is characterized by the payout structure where both the principal amount from the policy and any accrued interest are distributed over a predetermined duration. This means that the beneficiary receives regular payments for a specified period, which effectively liquidates the total benefit into manageable installments. The designated time frame does not change, and this approach ensures that the beneficiaries receive consistent cash flow while maximizing the use of the policy's overall value. Understanding this option is crucial for beneficiaries as it offers a balance between immediate access to funds and long-term financial planning.

The fixed-period settlement option is characterized by the payout structure where both the principal amount from the policy and any accrued interest are distributed over a predetermined duration. This means that the beneficiary receives regular payments for a specified period, which effectively liquidates the total benefit into manageable installments. The designated time frame does not change, and this approach ensures that the beneficiaries receive consistent cash flow while maximizing the use of the policy's overall value. Understanding this option is crucial for beneficiaries as it offers a balance between immediate access to funds and long-term financial planning.