Correct! The life-income option, also known as straight life, provides the recipient with an income that he or she cannot outlive. It pays the benefit while the beneficiary is alive; however, the payments stop at the beneficiary’s death.
What is known as straight life?
A straight life annuity, sometimes called a straight life policy, is a retirement income product that pays a benefit until death but forgoes any further beneficiary payments or a death benefit. Like all annuities, a straight life annuity provides a guaranteed income stream until the death of the annuity owner.
What does straight life policy mean?
A straight life insurance policy offers coverage that lasts a lifetime, with premiums that stay the same over the life of the policy. Straight life insurance is more commonly known as whole life insurance.
Which of the following settlement options are in life?
All of the following are life insurance settlement options, EXCEPT: There are four settlement options: interest only, fixed-period installments (period certain), fixed-amount installments and life income. An automatic premium loan is a policy loan provision.
What are the 5 settlement options for life insurance?
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.
What’s the key difference between term life insurance and straight life insurance?
Term life is “pure” insurance, whereas whole life adds a cash value component that you can tap during your lifetime. Term coverage only protects you for a limited number of years, while whole life provides lifelong protection—if you can keep up with the premium payments.
Which of these is characteristic of straight life policy?
However, straight life policies have several defining characteristics, regardless of insurer. They provide a guaranteed periodic income stream for the lifetime of the annuity owner. All payments end once the annuitant dies. They include no death benefit.
What are the settlement options?
The four most common alternative settlement approaches are: the interest option, under which the insurer holds the proceeds and pays interest to the beneficiary until such time as the beneficiary withdraws the principal; the fixed period option, under which the future value of the proceeds is calculated and paid in …
What are life insurance options?
A life option is a payout method for an annuity that guarantees periodic payments for life. The joint-life option continues paying the spouse if the annuitant passes away.