Which settlement option leaves the proceeds with the insurer and pays monthly earnings to the beneficiary?

• A. Interest only
• B. Life income
• C. Fixed amount
• D. Cash surrender

Answer: (A)

The main idea is how life insurance proceeds can be distributed under different settlement options. In the interest-only option, the insurer keeps the principal proceeds with them and pays the beneficiary monthly earnings, which are the interest on that principal. So the money stays with the insurer, and the beneficiary receives regular interest payments rather than a full payout of the death benefit.

This differs from other options: life income would convert the proceeds into a lifetime stream funded from the principal, rather than paying only interest while leaving the principal intact; a fixed amount option would pay a set sum periodically until funds are exhausted; cash surrender would pay out the entire amount as a lump sum upfront.