What Does Refund Life Income Option Mean?
Refund life income option is a type of life insurance settlement option that guarantees the total amount of the policy to a named individual (also called the annuitant).
In the event that the annuitant dies before the total of the periodic payments made is equivalent to the amount of the annuity, the remaining amount is given to a contingent payee. This means that the remaining balance is paid out to the heirs or beneficiary. This guarantees lifetime income from the insurance.
Insuranceopedia Explains Refund Life Income Option
The refund life income option is a type of settlement option with life contingency. It is based on the lifespan of the annuitant or payee; thus, it works with the notion that the payee cannot outlive the income payments. Thereby, the payment amount is based on the life expectancy of the payee. Those who have longer life expectancies make smaller periodic payments than people with a shorter lifespan.
Under the refund life income option, there are two types of refunds, namely:
- Installment refund: Under this option, the income payments are continued to a contingent payee in the same amount that was paid to the primary beneficiary.
- Cash refund: Under this option, the beneficiary receives a lump-sum payment of the remaining balance.