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Health and Life Insurance

Category - Annuities & Policies

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When Sarah’s mother died, Sarah elected to receive only payments of interest from her mother’s life insurance policy. When Sarah dies, her children will receive the lump sum benefit of her mother’s policy as well as the benefits of Sarah’s personal life insurance policy. What option has Sarah selected for her children?

Life income option
Interest only option
Fixed period option
Fixed amount option

Explanation

Answer: B - Sarah has selected the interest only option for her payments. While Sarah is alive she will receive interest only from her mother’s life insurance policy. When she dies, her children will then be able to receive any money left on her mother’s life insurance policy as a lump sum. Sarah’s life insurance policy will be kept separate.

FYI: The answer to this question is in the question

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