New York State Life Insurance Exam Questions Practice Question
An insured has elected to receive $20,000 per month until the principal and interest on his wife's life insurance policy has been paid out. The insured has elected which option?
Correct Answer: B
Rationale: The choice of a fixed amount option allows the insured to receive a specified monthly payment, in this case, $20,000, until the total principal and interest of the life insurance policy is exhausted.
Option A, interest only, would provide payments based solely on the interest earned, not a fixed amount until the principal is depleted. Option C, fixed period, pays a set amount over a specified time frame, which does not guarantee the monthly payment until the total is paid out. Option D, life income, offers payments for the insured's lifetime, which does not align with the intent to deplete the policy’s balance.
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