Which of the following is NOT a settlement option for life policies?

Rationale

Extended term is NOT a settlement option for life policies.

Settlement options for life insurance policies refer to the various ways beneficiaries can receive death benefits. While options like fixed period, pure life income, and life income with period certain are valid choices, extended term is not a recognized settlement option.

A (Fixed period.) YOUR ANSWER

This option allows the death benefit to be paid out over a specified number of years. The beneficiary receives periodic payments until the total benefit is exhausted, making it a viable settlement choice for life insurance policies.

B (Pure life income.) YOUR ANSWER

Pure life income provides beneficiaries with payments for as long as they live. This option ensures that the beneficiary receives a steady income stream, but payments cease upon their death. It is a legitimate settlement option for life insurance.

C (Extended term.) CORRECT

Extended term is not a settlement option; rather, it refers to a non-forfeiture option that allows a policyholder to convert their whole life insurance policy into term insurance for a specified time without additional premiums. This does not pertain to the settlement of death benefits, thus making it the correct answer to the question.

D (Life income with period certain.) YOUR ANSWER

This option combines a life income benefit with a guaranteed minimum payment period. Beneficiaries receive payments for their lifetime, but if they die within the specified period, payments continue to a designated beneficiary until that period ends, confirming its validity as a settlement option.

Conclusion

In summary, settlement options for life insurance policies include fixed period, pure life income, and life income with period certain. Extended term, however, does not qualify as a settlement option since it relates to policy conversion rather than the disbursement of death benefits. Understanding these distinctions is crucial for beneficiaries when choosing how to receive their life insurance payouts.

Which of the following is NOT a settlement option for life policies?

Extended term is NOT a settlement option for life policies.

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