New Jersey Life Insurance Exam Practice Question
An insured has chosen to receive the payout from her husband’s life insurance policy so that she will receive payments until the proceeds from the policy will have been paid out. The insured has selected which option?
Correct Answer: A
Rationale: The insured has selected the fixed period option, which allows her to receive payments over a predetermined time frame until the total policy proceeds are exhausted. This choice provides a structured payout, ensuring financial support for a specific duration.
Option B, interest only, would only pay the interest earned on the policy proceeds, not the principal amount, which does not align with the insured's goal of receiving full payments.
Option C, fixed amount, delivers a set dollar amount periodically but does not guarantee a specific payout duration, potentially leaving the insured without funds sooner than expected.
Option D, life income, provides payments for the insured's lifetime, which may exceed the total policy proceeds and is not suitable for her intention to receive payments until the policy is fully paid out.
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