settlement option

In the context of insurance, "settlement options" refer to the various ways beneficiaries can receive the proceeds from a life insurance policy after the insured person's death. These options can include a lump-sum payment, regular payments over a set period, or fixed monthly payments for as long as the proceeds last.1

Alternatively, a "life settlement" allows the policy owner to sell their policy to a third party for a lump sum of cash. This amount is typically more than the policy's cash surrender value but less than the death benefit. This option is often considered when financial needs change or premiums become unaffordable. A "viatical settlement" is a type of life settlement for individuals with a terminal illness, offering a higher payout due to a shorter life expectancy.2