Which option allows a policyholder to receive payments in an annuity format after death?

The life income option is specifically designed to ensure that a policyholder receives payments in the form of an annuity after their death, providing a predetermined income stream for the beneficiary. This option guarantees that the beneficiary will receive consistent payments during their lifetime, which can provide financial security and stability. The structure of this option allows for various arrangements; for example, it can be set up to provide income for a fixed period or for the lifetime of the beneficiary, depending on the chosen terms.

In contrast, the other options do not deliver payment in an annuity format after death. The fixed amount option involves disbursing a specific dollar amount until the total policy benefit is paid out, which is not necessarily tied to the lifetime of the beneficiary. The cash option provides a lump-sum payout, allowing the beneficiary to receive the full death benefit immediately. Lastly, the interest option typically pays out interest earned on the policy’s cash value while retaining the principal for future payments or benefits, rather than creating structured annuity payments. Thus, the life income option stands out as the correct choice for receiving payments in an annuity format after the policyholder’s death.