Which statement regarding a fixed period settlement option is correct?

The statement regarding a fixed period settlement option that is correct highlights how the installment payment amount is determined. In a fixed period settlement option, the total amount of the death benefit or account balance is divided into regular installments over a specified period. This means that the total value is divided by the number of installments, resulting in a consistent payment amount throughout the chosen period.

This approach allows beneficiaries to receive periodic payments rather than a lump sum, which can help manage financial needs over time. The fixed nature of this settlement gives beneficiaries a sense of financial security as they can plan their expenses knowing exactly how much they will receive at each interval. This structure also ensures that they receive the entire benefit amount within the designated time frame.

Understanding the mechanics of fixed period settlements emphasizes the benefits of predictable cash flow for beneficiaries, which is particularly important in financial planning. It also illustrates the significance of the settlement option's nature in contrast to other options that may not provide the same structure or consistency.