Which statement best describes the lump sum option in life insurance settlement?

The lump sum option in life insurance settlement refers to a one-time payment of the total proceeds to the beneficiary or policyholder. This payment is made in full at the time of the settlement and provides the recipient immediate access to the entire amount of the insurance benefit.

This option is often preferred by beneficiaries, as it allows them to use the funds according to their needs without the limitations or conditions attached to other settlement options. For instance, it can be used to pay off debts, invest, or handle immediate expenses resulting from the loss of the insured.

Other options typically involve structured payments, which can restrict access to the total amount or require beneficiaries to meet specific conditions before receiving payments, making the lump sum option particularly appealing for many recipients.