New Jersey Life Insurance Exam Practice Question
A widow age 70 has $250,000 in savings that she wants to distribute to her 5 grandchildren at her death. She also has a need for income. Which of the following is this?
Correct Answer: A
Rationale: Option A is the best choice as it provides immediate income to the widow while ensuring that the principal amount can be passed on to her grandchildren upon her death. The cash refund settlement option guarantees that if she passes away before receiving the full amount, the remaining funds will go to her beneficiaries.
Option B, while it provides a death benefit to the grandchildren, does not address the widow's immediate income needs.
Option C creates separate accounts for each grandchild, which may limit her access to funds and does not guarantee immediate income.
Option D provides a straightforward distribution but does not ensure the widow's income needs are met during her lifetime.
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