What factors determine the amount of each payment to a beneficiary under the fixed period option?

The fixed period option for life insurance beneficiaries involves certain calculations that are essential in determining the amount of each payment a beneficiary will receive. The correct answer reflects the fact that the amount of each payment is influenced by three key elements: the length of the fixed period, the death benefit of the policy, and the interest accrued on the death benefit during that period.

When a fixed period option is chosen, the insurer takes the total death benefit and divides it by the number of periods (e.g., months or years) designated in the fixed period. Additionally, any interest that accumulates on the remaining balance adds to the payments, which can influence how much the beneficiary receives in each installment. Therefore, both the death benefit and the duration of the fixed period are critical in establishing the overall payout amount; interest can further enhance this amount, making it significant in the final calculation.

In contrast, other factors mentioned in the incorrect options, such as the age of the insured at death or the health status of the insured, do not directly affect the computation of the fixed period payments. These factors may play a role in underwriting or determining the policy's terms and conditions initially but do not influence the periodic payment structure following the insured's death.