Final answer:
If a settlement option is not chosen by the policyowner or beneficiary, the default option used by the insurer is the cash surrender option.
Step-by-step explanation:
If a settlement option is not chosen by the policyowner or beneficiary, the default option used by the insurer is the cash surrender option.
In a cash-value life insurance policy, the policyholder can choose from various settlement options that determine how the policy benefits are paid out. If no specific option is chosen, the insurance company will default to the cash surrender option.
The cash surrender option allows the policyholder to surrender the policy and receive the accumulated cash value as a lump sum payment. This means that the policyholder will receive the cash value of the policy instead of any other forms of payment or settlement options.