Settlement Options
What Does Settlement Options Mean?
Settlement options are the methods by which life insurance companies disburse benefits to policyholders with valid claims. The most common settlement option is a lump-sum payment. However, other settlement options are also available to policyholders or beneficiaries. The settlement amounts vary depending on the specific policy.
Insuranceopedia Explains Settlement Options
Other settlement options include the interest option, fixed-period option, fixed-amount option, and life income option. These options involve periodic payments rather than a single lump-sum payout. Despite these alternatives, many individuals prefer the lump-sum option. Lump-sum payments are often more convenient, as they involve a one-time transfer of funds. Additionally, if the policyholder passes away, the beneficiary may have an immediate need for a substantial sum of money.
