Life · Chapter 6 · Settlement Options
Interest-Only Option
Definition
The insurer holds the death benefit and pays only the earned interest (guaranteed minimum, paid at least annually) to the beneficiary. Principal is guaranteed; the beneficiary usually keeps the right to withdraw later.
Exam tip
The interest paid is taxable to the beneficiary.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms