Question 35

Interest only is the settlement option that allows proceeds to remain with the Insurer and the earnings to be paid to the beneficiary on a monthly basis.

This option enables the principal amount to stay invested with the insurer, while the beneficiary receives the interest accrued on a regular monthly schedule.

A) interest only.

This option is correct because it specifically describes a settlement approach where the insurer retains the principal sum, providing only the interest earnings to the beneficiary. This arrangement allows the beneficiary to receive a steady income stream without the need to access the principal amount immediately.

B) lump sum.

This option is incorrect as a lump sum settlement involves paying out the entire principal amount to the beneficiary at once, rather than retaining it with the insurer. Therefore, it does not align with the description of proceeds remaining with the insurer.

C) fixed period.

This option is not correct because a fixed period settlement would involve distributing the principal amount over a specified time frame. In this case, the principal does not stay with the insurer, which contradicts the requirement outlined in the question.

D) fixed amount.

This option is also incorrect since a fixed amount settlement would entail regular payments of a specified amount to the beneficiary until the funds are exhausted. The principal would not remain with the insurer, as it would be disbursed to the beneficiary over time.

Conclusion

In conclusion, the interest only option is the only choice that fulfills the criteria of keeping the principal with the insurer while providing monthly payments to the beneficiary from the interest earned. All other options either distribute the principal immediately or do not conform to the requirement of the insurer retaining the proceeds.