Which settlement option is described as paying earnings to the beneficiary while the principal remains with the insurer?

Which settlement option is described as paying earnings to the beneficiary while the principal remains with the insurer?

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

Answer: (D)

Interest-only settlement focuses on paying the beneficiary only the earnings on the death benefit while the principal stays with the insurer. In this option, the insurer keeps the death benefit invested and makes periodic payments to the beneficiary that come from interest earned, not from depleting the principal. This differs from other methods: life income would provide payments for the beneficiary’s lifetime, drawing down the principal; fixed period or fixed amount options distribute specific portions of the principal over time; and cash surrender isn’t a standard death-benefit settlement option but a surrender of the policy’s cash value. So the description matches the interest-only settlement.

Interest-only settlement focuses on paying the beneficiary only the earnings on the death benefit while the principal stays with the insurer. In this option, the insurer keeps the death benefit invested and makes periodic payments to the beneficiary that come from interest earned, not from depleting the principal. This differs from other methods: life income would provide payments for the beneficiary’s lifetime, drawing down the principal; fixed period or fixed amount options distribute specific portions of the principal over time; and cash surrender isn’t a standard death-benefit settlement option but a surrender of the policy’s cash value. So the description matches the interest-only settlement.