Final answer:
In life insurance policies, settlement options such as fixed period, interest option, and life income involve the payout of benefits to beneficiaries, while 'extended term insurance' is actually a nonforfeiture option, rather than a settlement option.
Step-by-step explanation:
The question posed is related to the options available for life insurance payouts. Specifically, it aims to identify which of the provided options is not a settlement option. By looking at the options listed, the answer may not be immediately apparent without a clear understanding of insurance terms, but here's what each option typically means in a life insurance policy:
- Fixed period - This settlement option provides payments to beneficiaries over a specified period.
- Interest option - With this option, the insurance company holds the death benefit and pays interest on the proceeds to the beneficiaries.
- Life income - This option provides a guaranteed income for the life of the beneficiary, similar to an annuity.
Considering these common settlement options, extended term insurance is not actually a settlement option, but rather a nonforfeiture option that allows the policy's cash value to be used to purchase term insurance for a specified period.