Primerica Life Producer Practice Test

What settlement option should a policyowner choose to ensure annual payments to a spouse and a principal payment to children at a certain age?

1. Life annuity option

2. Whole life option

3. Interest only option

4. Joint survivor option

The correct answer is: Interest only option

The most suitable settlement option for providing annual payments to a spouse while ensuring a principal payment to children at a specific age is the interest only option. This option allows the insurance company to pay interest on the principal amount to the spouse, providing them with regular annual payments. At the same time, the principal can be structured to be paid out directly to the children when they reach the specified age. This arrangement effectively meets the dual objectives: supporting the spouse financially through regular income, while also ensuring that the children receive a significant lump sum when they are mature enough to manage it, thus balancing immediate and future needs. The flexibility of this option allows the policyowner to cater to the financial requirements of both their spouse and their children.