Final answer:
The beneficiary provision or settlement option provision specifies how life insurance proceeds are managed. Cash-value life insurance provides a death benefit and accumulates cash value that can be used by the policyholder.
Step-by-step explanation:
The manner in which the proceeds of a life insurance policy are handled is specified in the beneficiary provision or settlement option provision. A cash-value (whole) life insurance policy not only provides a death benefit to the beneficiaries when the policyholder dies but also accumulates a cash value over time.
This cash value can serve as a savings account, which the policyholder can use for various purposes including loan collateral or to pay premiums. The policy outlines specific methods for payout, such as lump-sum payments or annuity options, ensuring that the policyholder's wishes are followed in handling the policy's proceeds.