Elizabeth is the beneficiary of a life insurance policy and is receiving the death benefit in payments of $10,000 per month until the principal and interest have been paid out. Which settlement option was chosen?

• A. Fixed Period
• B. Fixed Amount
• C. Life Income
• D. Installment Refund

Answer: (B)

This situation highlights the fixed-amount settlement option. In this option, the beneficiary receives a set dollar amount at regular intervals, and the payments continue until the entire death benefit plus any interest has been paid out. Here, receiving a constant $10,000 each month and continuing until the principal and interest are exhausted fits that description—the monthly amount is fixed, and how long the payments last depends on how large the death benefit is.

This differs from a fixed-period option, which guarantees payments for a specific, predetermined number of months or years regardless of the balance left. It also differs from a life-income option, which pays as long as the recipient is alive (and ends at death, not when the funds run out). Installment refund involves a life-contingent plan with remaining balance refunded to a beneficiary after death, which isn’t described here.