Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A beneficiary who selects the life income settlement option for life insurance proceeds receives:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The life income option pays a guaranteed income for as long as the beneficiary lives, regardless of how long that is; the insurer bears the risk of outliving the principal. This is one of the settlement options listed in objective LIFE-II.E.9, along with lump sum, fixed amount, fixed period, and interest only. The insurer pools longevity risk to fund the lifetime guarantee.
Why the other options are wrong
- B) A single lump sum is the lump-sum option, not a lifetime income stream.
- C) Payments for a stated number of years describe the fixed period option.
- D) Interest-only payments keep the principal intact for the beneficiary's heirs, not for the beneficiary's lifetime income.
Memory hook
Life income = an income you cannot outlive. The insurer worries about the calendar.