Final answer:
Pure Life insurance pays out a death benefit until the insured's death with no guaranteed minimum. Life with Guaranteed Minimum offers additional assurance with a minimum payment guarantee to the beneficiaries, while cash-value life insurance accumulates savings that can be borrowed against. The correct option is b.
Step-by-step explanation:
The difference between Pure Life and Life with Guaranteed Minimum settlement options has to do with the payment structure and benefits provided to the beneficiaries upon the insured's death.
Pure Life, also known as straight life or life-only, will pay out a death benefit to the beneficiaries as long as the insured passes away while the policy is in force. There is no guaranteed minimum; the benefits stop upon the insured's death.
On the other hand, Life with Guaranteed Minimum provides a minimum payment guarantee. This means that if the insured dies after receiving some of the benefits but before a certain threshold amount or time period has been reached, the insurer will pay out the remaining principal (or payments up to a minimum period) to the beneficiaries.
Both of these are contrasted with the concept of cash-value (whole) life insurance, which not only has a death benefit but also accumulates cash value. This cash value can be borrowed against. The loan must be paid back with interest, otherwise, it may decrease the death benefit or cash value. The correct option is b.