What provision allows settlement payments to be made in installments rather than a lump sum?

What provision allows settlement payments to be made in installments rather than a lump sum?

• A. Automatic premium loans
• B. Payor benefit
• C. Spendthrift clause
• D. Rider

Answer: (C)

The idea being tested is how the death benefit can be paid out. A spendthrift clause is designed to protect a beneficiary from mismanaging funds and from creditors by restricting how proceeds are paid. It often specifies that the death benefit will be distributed in installments rather than as a single lump sum, ensuring the funds last and are used for the beneficiary’s needs over time. Automatic premium loans relate to using the policy’s cash value to cover overdue premiums, not how settlement proceeds are distributed. Payor benefit covers who pays the premiums if the payer can no longer do so. A rider is an additional feature or provision attached to the policy. None of these governs installment payments of the death benefit like a spendthrift clause does.

The idea being tested is how the death benefit can be paid out. A spendthrift clause is designed to protect a beneficiary from mismanaging funds and from creditors by restricting how proceeds are paid. It often specifies that the death benefit will be distributed in installments rather than as a single lump sum, ensuring the funds last and are used for the beneficiary’s needs over time.

Automatic premium loans relate to using the policy’s cash value to cover overdue premiums, not how settlement proceeds are distributed. Payor benefit covers who pays the premiums if the payer can no longer do so. A rider is an additional feature or provision attached to the policy. None of these governs installment payments of the death benefit like a spendthrift clause does.