Pays a fixed, specified amount in installments until the proceeds are exhausted; recipient selects specified fixed dollar amount to be paid before proceeds are gone.

Pays a fixed, specified amount in installments until the proceeds are exhausted; recipient selects specified fixed dollar amount to be paid before proceeds are gone.

• A. Life-income option
• B. One-year term
• C. Fixed-period installments
• D. Fixed-amount installments

Answer: (D)

When settling life insurance proceeds, the payout can be arranged so the recipient controls how much is paid each time. In the fixed-amount installments option, the beneficiary selects a fixed dollar amount to be paid with each installment, and payments continue until the entire proceeds are exhausted. This gives predictable cash flow, with the total payout length determined by the chosen amount (and any interest earned on the remaining balance). A larger per-payment amount depletes the funds sooner, while a smaller amount extends the payout. This contrasts with paying for life, which provides payments for the recipient’s lifetime regardless of the remaining balance, or with a fixed-period arrangement that covers a set number of payments over a predetermined term, and a one-year term that lasts only for a single year.

When settling life insurance proceeds, the payout can be arranged so the recipient controls how much is paid each time. In the fixed-amount installments option, the beneficiary selects a fixed dollar amount to be paid with each installment, and payments continue until the entire proceeds are exhausted. This gives predictable cash flow, with the total payout length determined by the chosen amount (and any interest earned on the remaining balance). A larger per-payment amount depletes the funds sooner, while a smaller amount extends the payout. This contrasts with paying for life, which provides payments for the recipient’s lifetime regardless of the remaining balance, or with a fixed-period arrangement that covers a set number of payments over a predetermined term, and a one-year term that lasts only for a single year.