Jane purchased a life insurance policy on her own life and named her daughter,Cheryl,the beneficiary.Cheryl has a history of not managing money well.Jane wants the death benefit paid to Cheryl in monthly installments over 20 years.Which settlement option should Jane pre-select for Cheryl?

Question

Quizplus · Accepted Answer

The best settlement option for Jane to pre-select for Cheryl is the fixed period option, which pays the death benefit in equal installments over a set period of time. This will ensure that Cheryl does not receive a large lump sum that she may mismanage. By receiving equal payments over 20 years, Cheryl can have a steady stream of income without the risk of spending it all at once. The fixed amount option would also pay a set amount, but for an indefinite period of time, which may not be the best choice if Cheryl's spending habits are a concern. The lump sum and interest options would provide Cheryl with a large sum of money upfront, which may not be the best choice if Jane is worried about Cheryl's financial management abilities.

Jane Purchased a Life Insurance Policy on Her Own Life