What is the primary purpose of a fixed-period settlement option?

The primary purpose of a fixed-period settlement option is to provide a guaranteed income for a specified period. This option allows the policyholder or beneficiary to receive regular payments over a determined duration, which can be beneficial for budgeting and financial planning. The fixed-period settlement ensures that the recipient knows exactly how much they will receive and for how long, offering a sense of security and predictability in their finances during that timeframe.

In contrast to options that provide a lump sum payment, the fixed-period settlement focuses on delivering consistent income rather than a one-time payment. While options that guarantee lifelong benefits are designed for providing ongoing payments until death, the fixed-period option is limited to the specified time frame. Similarly, the option to defer payments until a later date does not align with the nature of a fixed-period settlement, which requires payments to begin immediately or shortly after the death of the insured or at the time of claim initiation.