L&HGeorgiamedium
A Georgia life policy beneficiary elects to receive proceeds under the 'interest only' settlement option. What is the defining feature of this option?
AThe principal is paid in equal installments over a fixed period chosen by the beneficiary
BThe proceeds are converted into a lifetime annuity with no refund feature
The insurer holds the proceeds and pays only the interest they earn
DThe beneficiary receives proceeds plus interest as a lump sum within 30 days
Why this is the answer
Under the interest-only settlement option, an insurer holds the death proceeds and pays the beneficiary only the interest earned on those proceeds at a rate at least equal to the contract's guaranteed minimum (often with excess interest credited). The principal remains intact and may be withdrawn later in a lump sum or converted to another settlement option (fixed period, fixed amount, life income) by the beneficiary, depending on policy terms.
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