Which settlement option is described as paying a fixed amount until the corpus is depleted?

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

Answer: (B)

The main idea being tested is how a fixed amount settlement works. In this option, the beneficiary receives a specific, fixed dollar amount each period, drawn from the corpus. The key point is that payments continue only until the original principal is exhausted, regardless of how long the recipient lives. So if the corpus is $60,000 and the payment is $1,000 each period, you’d receive about 60 payments, and once those are paid out, no further payments occur.

This differs from other settlement options: a fixed period option guarantees payments for a set period (even if the recipient dies, the remaining scheduled payments go to the beneficiary for the rest of that period), a life income option pays as long as the recipient is alive, and an installment/refund option continues payments with a mechanism to refund any remaining portion to a beneficiary. The fixed amount option is finite and ends when the corpus is depleted.