11.2a

Question 1

When death occurs, a whole life policy’s beneficiary has several options from which to choose in receiving the policy’s death benefit proceeds. Referred to as ______, the beneficiary can choose to receive the policy’s death benefit proceeds as a single lump sum payment, or through periodic payments known as ‘installments.’

Answer 1

Settlement Options

Question 2

Choosing a settlement option allows the policyowner and beneficiary to invest and gain interest on the principal face amount versus just receiving a lump-sum payment upon the insured’s death. When a settlement option is chosen over a lump-sum payment, the insurance ______. This will ultimately give the beneficiary a larger return than simply receiving the policy face amount.

Answer 2

company keeps the death benefit proceeds and invests it to gain interest for the beneficiary

Question 3

Upon the death of the policy’s insured, the designated beneficiary can choose to ______.

Answer 3

receive a single, lump-sum payment of the policy’s death benefit proceeds

Question 4

Under the interest-only option, a whole life policy’s face amount is held by the insurer and ______.

Answer 4

placed into a trust or other financial vehicle where it earns interest

Question 5

Under the interest only option, as established by the policyowner, the policy’s beneficiary initially receives payments only from ______. This interest is paid periodically to the beneficiary until a specified date or period of time has been met, as defined by the policyowner.

Answer 5

the interest earned by the policy’s face amount while it sits in the trust