Question 26

The insured has selected the fixed period option.

The insured has chosen the fixed period option, which allows her to receive payments over a predetermined span of time until the full proceeds of the life insurance policy are disbursed.

A) Fixed period.

This option is correct as it specifically refers to a payout method where the beneficiary receives regular payments for a set duration. In this case, the insured will receive payments until the total amount of the policy is exhausted, aligning perfectly with the description provided in the question.

B) Interest only.

The interest-only option would provide the beneficiary with the interest earned on the policy proceeds while leaving the principal intact. This does not fit the scenario described, as the insured is receiving payments until the entire policy amount is paid out, rather than just the interest accrued.

C) Fixed amount.

The fixed amount option allows for payments of a specified sum until the policy proceeds are depleted. While it provides regular payments, it does not imply a set period, which is the key distinction from the correct answer. The insured is not receiving a fixed amount but rather payments over a fixed duration.

D) Life income.

The life income option guarantees payments for the lifetime of the beneficiary, which does not match the context provided. The insured's choice is based on receiving payments for a defined period, rather than for her entire lifetime, thus making this option incorrect.

Conclusion

The fixed period option is the only choice that accurately reflects the arrangement made by the insured for receiving payments until the policy proceeds are fully paid out. Other options, such as interest only, fixed amount, and life income, do not align with the specific payment structure described in the question, affirming that A is definitively correct.