Which settlement option ensures the principal never decreases unless withdrawals are made?

The settlement option that ensures the principal never decreases unless withdrawals are made is the interest only option. This choice allows the insurance company to hold the principal amount while paying out interest to the beneficiary. The principal remains intact and will only decrease if the beneficiary decides to withdraw funds from it. This is a critical feature of the interest only option, safeguarding the principal amount against depletion unless withdrawals are explicitly authorized by the beneficiary.

The life income option provides guaranteed payments for the life of the beneficiary but does not keep the principal intact, as these payments are derived from both the principal and the interest. Similarly, the fixed period option provides payments over a specified number of years but doesn't preserve the principal either; instead, it depletes it over time through regular distributions.

Recognizing these aspects clarifies why the interest only option is the correct choice, as it preserves the principal for the duration of its investment unless the beneficiary opts to withdraw funds.