Which statement best describes beneficiaries' preference for settlement options versus lump sums?

• A. They generally prefer to receive funds through settlement options.
• B. They generally prefer to receive funds as a lump sum.
• C. They typically avoid any option that pays over time.
• D. They typically no preference between lump sum and settlement options

Answer: (B)

The main idea here is how beneficiaries typically want to receive life insurance proceeds. In most cases, beneficiaries favor a lump-sum payout because it provides immediate liquidity—they can pay off debts, funeral costs, taxes, and have funds available right away for investment or to distribute as they choose. Settlement options spread the money out over time and offer guaranteed income, which can be valuable for budgeting and preventing mismanagement, but that comes at the cost of less flexibility and control over the funds. While some people value the steady income from settlement options, the general tendency is to prefer the lump-sum payout for maximum access and versatility.