What settlement option allows the beneficiary to receive the death benefit as a lump sum?

The settlement option that allows the beneficiary to receive the death benefit as a lump sum is known as the lump sum/cash option. This option provides the beneficiary with the full amount of the death benefit immediately upon the death of the insured. This can be advantageous for individuals needing immediate access to funds for expenses such as funeral costs, debts, or other urgent financial needs.

By choosing the lump sum option, beneficiaries retain complete control over the proceeds, allowing them to use the money as they see fit, whether that be investing it, saving it, or paying off outstanding obligations. This option is straightforward and offers instant liquidity, making it a commonly preferred choice among beneficiaries.

In contrast, other options like life income and fixed amount do not provide the entire amount at once, but rather distribute it over a period or lifetime, which does not satisfy the requirement for a lump sum payment. Interest only would provide only the interest earned on the death benefit while retaining the principal sum, not giving the immediate cash payout that characterizes the lump sum option.