Final answer:
The settlement option where proceeds remain with the insurer and earnings are paid every month to the beneficiary is the life annuity settlement. The lump-sum settlement means paying everything at once, while installment settlement refers to a set amount paid out regularly until the total proceeds are distributed.
Step-by-step explanation:
Cash-value (whole) life insurance policies not only provide a death benefit but also build up cash value over time. When it comes to the settlement options that allow the proceeds to remain with the insurer, and where the earnings are paid every month to the beneficiary, the answer is c. Life annuity settlement. This option provides regular payments for the life of the beneficiary, and the insurance company manages the proceeds from the policy.
Option a, Lump-sum settlement, involves paying out the entire death benefit at one time to the beneficiary, and no further earnings are paid out monthly. Option b, Installment settlement, could involve monthly payments, but often it means that a certain amount of money is paid out regularly until the total proceeds are paid out, without necessarily generating earnings from the remaining balance. Conversely, a life annuity generates monthly payments that can include interest and earnings from the insurer’s management of the funds.