Life · Chapter 6 · Settlement Options
Settlement Options
Definition
The methods for paying out the death benefit. The five: (1) lump-sum, (2) interest only, (3) fixed period, (4) fixed amount, (5) life income. The owner may pre-select one (the beneficiary then can't change it); otherwise the beneficiary usually chooses at death.
Exam tip
Interest paid on proceeds is TAXABLE even though the principal is tax-free. ⚠️ Leaving proceeds with the insurer does not by itself block the beneficiary's creditors — that takes a spendthrift clause. What Florida gives automatically is different: F.S. 222.13 shields the proceeds from the insured's creditors when a named beneficiary (not the estate) collects, and F.S. 222.14 shields cash surrender values and annuity proceeds.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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