Which life insurance settlement option provides a fixed monthly benefit until both the principal and interest are exhausted?

The correct answer is the fixed amount installment option. This settlement option allows policy beneficiaries to receive a predetermined fixed monthly payment until the total principal and accumulated interest are completely exhausted. The structure of this option offers financial predictability, ensuring that the recipients know exactly how much they will receive each month. This can be particularly beneficial for beneficiaries who wish to manage their funds over a set period rather than receiving a lump sum that may not last as long.

This option contrasts with a fixed sum option, which would provide a specific total amount rather than a monthly payment. The life annuity option, on the other hand, pays benefits based on the lifetime of the annuitant, which may or may not last until the principal and interest are exhausted. Lastly, the lifetime benefit option typically guarantees payouts for the lifetime of the insured rather than being tied to the depletion of the principal and interest. Thus, the fixed amount installment option is unique in that it directly relates to the duration over which both principal and interest are paid out in fixed monthly installments.