California Insurance License Exam Practice Test Practice Question
A life insurance policy beneficiary wants to receive benefits over a period of eight years while two children are in college. Which settlement option should be chosen?
Correct Answer: D
Rationale: Selecting the fixed period option allows the beneficiary to receive regular payments over a specified eight-year duration, aligning perfectly with the need to support two children in college. This ensures a steady income stream during a critical time.
The cash option (A) provides a lump sum, which may not be ideal for managing expenses over time. The interest option (B) only pays interest on the policy amount, potentially insufficient for covering educational costs. The fixed amount option (C) delivers set payments but lacks the tailored duration needed for the eight-year college period. Thus, the fixed period option best meets the beneficiary's financial needs.
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