45. A beneficiary wants to let the death benefit accumulate and receive only the monthly investment proceeds. Which settlement option should be chosen?
Answer: B
The beneficiary should choose the interest option.
The interest option allows the death benefit to accumulate while providing the beneficiary with the monthly investment proceeds from the accrued interest. This means the principal amount remains intact, growing over time, while the beneficiary receives regular income.
A) Cash option.
The cash option involves receiving the entire death benefit as a lump sum immediately. This does not align with the beneficiary’s desire to let the benefit accumulate while only receiving monthly proceeds, making it an unsuitable choice.
B) Interest option.
The interest option is the most appropriate choice as it permits the death benefit to earn interest while the beneficiary receives the interest payments monthly. This option effectively balances the desire for accumulation with the need for regular income.
C) Fixed amount option.
The fixed amount option provides the beneficiary with a predetermined monthly payment until the benefit is exhausted. While it offers regular payments, it does not allow for the accumulation of the principal which the beneficiary intends to preserve.
D) Fixed period option.
The fixed period option pays out the death benefit in equal monthly installments over a set period. This option does not allow the death benefit to accumulate interest, thus failing to meet the beneficiary's objective of allowing the benefit to grow while receiving regular payments.
Conclusion
The interest option is definitively the best choice for the beneficiary as it enables the benefit to accumulate while providing monthly proceeds from the interest earned. In contrast, the other options either provide immediate access to the full benefit or structured payments that do not satisfy the need for accumulation, thereby failing to meet the beneficiary's requirements.