Question

If death benefits are paid in installments, when must the amount and period be determined?

A. At the time of the insured's death
B. At the time of policy issue
C. At the time of the first installment payment
D. At the time of the claim settlement

Answer 1

When death benefits are paid in installments, the amount and period must be determined at B. At the time of policy issue.

Step-by-step explanation:

This is the stage when the terms and conditions of the insurance policy are established, including how the death benefits are to be paid out. These details are typically outlined in the policy contract, and both the policyholder and the insurer agree upon them before the policy goes into effect.

Death benefits can be paid out in a lump sum or through an annuity, which provides regular payments over a certain period. The decision on how to receive the death benefits is often made when the policy is purchased or can sometimes be designated by the insured before death, but always ahead of the insured's passing. This allows policy beneficiaries to plan financially after the policyholder dies. Moreover, understanding this helps ensure that insurance payments align with the financial goals and needs of the beneficiaries.