CARD Q047
A beneficiary wants proceeds distributed over exactly 12 years. Which settlement option fixes the duration?
- Interest-only settlement
- Fixed-amount settlement
- Fixed-period settlement
- Life-only annuity
Fixed-period settlement
Fixed period specifies the payout duration. Fixed amount specifies the installment amount, so the duration can vary.
Why each choice is right or wrong
A. Interest-only settlement
Incorrect. Interest-only leaves principal with the insurer and does not by itself distribute it over 12 years.
B. Fixed-amount settlement
Incorrect. Fixed amount sets installment size; duration depends on funds and interest.
C. Fixed-period settlement
Correct. Fixed period specifies the payout duration. Fixed amount specifies the installment amount, so the duration can vary.
D. Life-only annuity
Incorrect. Life-only follows the recipient’s lifetime rather than an exact 12-year duration.
Review the related terms
Use these lessons to revisit the concepts and try additional practice questions.