Billy is the owner of a life insurance policy and has chosen a policy settlement option under which the company will pay the beneficiary (his widow) an income each month for as long as she lives. Payment stops at her death. Which settlement option has Billy selected?

The fixed amount option allows the beneficiary to receive a predetermined set amount of money at regular intervals until the policy's proceeds are exhausted. This does not guarantee payments for the duration of the beneficiary's life, making it unsuitable for Billy’s intention to provide lifelong support for his widow.

A fixed period option pays the beneficiary a set income for a specified number of years, regardless of whether they are alive at the end of that period. This option does not provide the lifelong income that Billy intended for his widow, thus it does not align with his chosen settlement method.

The interest only option means that the insurance company pays only the interest earned on the policy’s proceeds, leaving the principal amount intact. This setup does not provide an income for life, as it depends on the interest generated rather than a guaranteed payment for the beneficiary's lifetime.