What is true about fixed period and fixed amount settlement options? (2023)

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What is true about fixed period and fixed amount settlement options?

Fixed period

The fixed period settlement option leaves the death benefit and earned interest with the insurer, who distributes equal payments over a specific period of time. That monthly check functions as tax-free income and can help your beneficiary cover living expenses.

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What is a fixed amount settlement option?

Fixed Amount Option — an option that a life insurance beneficiary may select as a settlement, whereby the policy proceeds are paid through periodic installments of fixed amounts until the principal and interest are exhausted.

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What is the purpose of fixed period settlement option?

What is the purpose of a fixed-period settlement option? To provide a guaranteed income for a certain amount of time.

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Which of the following options is the settlement option of a life policy that provides periodic payments?

An annuity or a pension is type of settlement option where the insured gets regular stream of income after the completion of the maturity period when the insured reaches the vesting age.

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Which of the following is true regarding a single life settlement option?

Which of the following is true regarding a single life settlement option? It provides income the beneficiary cannot outlive.

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Which of the following settlement options provides benefits that are income tax exempt?

The lump-sum payment settlement option produces death benefits that are fully tax exempt to life insurance beneficiaries. The other options involve interest earned on the proceeds, which is not exempt from income tax.

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What does settlement options mean in insurance?

Settlement Options — in life insurance, how proceeds are paid to the designated beneficiaries. Most life insurance policies provide for payment in a lump sum.

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What is fixed period?

(a) fixed-period (absence): (an absence) for a length of time that will not change.

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Which of the following settlement options in life insurance is known as straight life?

Which of the following settlement options in life insurance is known as straight life? Correct! The life-income option, also known as straight life, provides the recipient with an income that he or she cannot outlive.

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Which of the following options is the settlement option of a life policy that provides periodic payments of a specific amount as long as the proceeds plus interest last?

Joint and survivor annuities provide fixed, periodic payments for as long as either of two beneficiaries is alive with payment ending when the surviving beneficiary dies. If a policy has a $100,000 death benefit, the beneficiary can choose the joint and survivor life income option for her life and her spouse's life.

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What are the three settlement options?

What Are the Five Settlement Options for Life Insurance?
  • Lump-Sum Payment. Most people choose a lump-sum payout as their preferred life insurance settlement option. ...
  • Life Income. A life income settlement is also known as a life annuity. ...
  • Fixed Amount. ...
  • Fixed Period. ...
  • Interest Income.
11 Nov 2021

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How is the interest portion of a fixed period settlement option treated for tax purposes?

8. Fixed Period. When a Fixed Period is chosen, the death benefit is paid out over a specific period of time such as 5, 10, or 15 years. Interest will typically be added as well and that portion will be taxable.

What is true about fixed period and fixed amount settlement options? (2023)
Which life insurance settlement option is considered the default option if no other option is elected?

If the policyowner does not choose a settlement option for the beneficiary, then the policy proceeds default to payment in lump-sum. The correct answer is: The policy proceeds default to lump-sum payment.

Which of the following settlement options provides payments that are guaranteed during the lifetime of two people?

Life income joint and survivor settlement option guarantees ensure that if one of the beneficiaries dies, the surviving member will continue to receive a regular revenue stream that will be adjusted for a higher amount.

Which of the following has the right to change a settlement option in a life insurance policy?

The beneficiary may have the right to increase or decrease the amount of the payments, or to change to a different settlement option. The beneficiary may also have the right withdraw part or the entire amount at one time.

Which of the following settlements of a life insurance policy is taxable?

Which of the following settlements of a life insurance policy is taxable? Life benefits paid to a beneficiary are generally tax-free. However, with an interest-only settlement, installment payments are taxable because they are 100% interest earned on the principal.

Which settlement option provides a single beneficiary with income?

Which settlement option provides a single beneficiary with income for the rest of his/her life? Correct! The Single Life Option provides a single beneficiary with income for the rest of his/her life.

Which of the following statements defines an owner as it relates to life settlement contracts?

Which of the following best defines the owner of a life settlement contract? The term "owner" refers to the owner of the policy who may seek to enter into a life settlement contract.

Which statement is correct regarding mutual insurance companies?

mutual life insurance companies. Which statement is correct regarding mutual insurance companies? A mutual company refunds part of the premium to the policyholders.

When a settlement option is chosen at death How are the monthly income payments taxed quizlet?

When a settlement option is chosen at death, how are the monthly income payments taxed? The principal portion is generally income tax-free while the interest portion is taxed as ordinary income. A married couple wants to include the entire family in their whole life policy under one rider.

How long will the beneficiary receive payments under the single life settlement option?

Under a single life annuity with a 10 or 15 year certain period, guaranteed monthly payments will be made to you for at least a specified number of years. (You can choose either a 10-year period or a 15-year period.) Under this form of annuity, you will receive monthly payments for as long as you live.

What does settlement amount mean?

Settlement Amount means the amount in US$ equal to the sum of Losses, Gains, and Costs, which the Non-Defaulting Party incurs as a result of the termination of this Agreement.

What are the types of claim settlement?

The claim settlement is the final stage of the claim process in insurance.
...
4 Major Types Of Claims Settlement
  • Payment of money.
  • Replacement of the item covered.
  • Reinstatement.
  • Paying for repairs.

What settlement options are available in life insurance?

Common Life Insurance Settlement Options
  • Lump-Sum Payment. A lump-sum payment is perhaps the easiest to understand. ...
  • Interest Only. ...
  • Interest Accumulation. ...
  • Fixed Period. ...
  • Lifetime Income. ...
  • Lifetime Income With Period Certain.

What is the fixed amount?

Fixed Amount means an amount equal to the product of (a) the Notional Quantity per Determination Period multiplied by (b) the Fixed Price, or as otherwise provided in the Confirmation.

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