What settlement option involves a single payment of benefits owed to a beneficiary?

The correct answer is a lump-sum settlement, which refers to the provision of the full amount of benefits in one single payment to the beneficiary. This option is often preferred as it allows the beneficiary immediate access to the funds, enabling them to use the money for any purpose, such as paying off debts, covering expenses, or investing.

In the context of life insurance, beneficiaries may choose a lump-sum settlement because it provides the most straightforward financial relief, especially during a time of emotional distress following the loss of a loved one. Beneficiaries do not have to wait for installments or adhere to structured payouts; instead, they receive full control over the total benefit amount at once. This flexibility is essential, as it helps beneficiaries manage their financial situation according to their immediate needs and long-term goals.

Other options, such as a lifetime annuity or periodic payments, involve distributing the benefit over time rather than in one complete sum, which may not suit everyone’s needs in terms of urgency or personal financial management.