Arizona Life and Health Practice Exam

Which settlement option guarantees minimum dollar payments over a specified number of years?

1. Life Annuity

2. Fixed Period

3. Joint Life

4. Lifetime Income

The correct answer is: Fixed Period

The fixed period settlement option guarantees minimum dollar payments over a specified number of years. This option ensures that the beneficiary receives a set amount of money at regular intervals for the duration of the specified period. If the insured passes away before the end of that period, the remaining payments are made to the beneficiary or, if the beneficiary is also deceased, to the estate. This approach provides a level of financial security, ensuring that the payments are made regardless of the lifespan of the insured, as long as the defined period has not yet elapsed. In contrast, the life annuity option focuses on payments that continue for the life of the annuitant, without a guaranteed time frame. This means there is a possibility that payments could end if the annuitant dies earlier than expected. Options like joint life focus on multiple lives, and lifetime income typically emphasizes income for as long as the individual lives, which does not guarantee payments over a limited timeframe. Thus, fixed period offers the unique benefit of assured payments for a predetermined duration, making it the correct choice for this question.