What is the main purpose of a Life Income Option in insurance?

The Life Income Option in insurance primarily serves to provide a steady income stream to the beneficiary for the duration of their lifetime. By choosing this option, the beneficiary receives payments in the form of an annuity, which ensures that they will receive a consistent income rather than a lump sum. This structure can be particularly beneficial for individuals who may need regular financial support, such as dependents or individuals who rely on the deceased's policy for their ongoing living expenses.

This option also helps manage the risk of outliving one’s resources since it guarantees income for as long as the beneficiary lives. This aspect of financial security is a significant advantage, especially in planning for retirement or long-term care needs.

In contrast, the other options focus on different aspects of financial planning and benefits that do not align with the primary purpose of the Life Income Option. For example, providing a lump sum payment or funding a trust are strategies that may serve different financial goals but do not offer the same ongoing financial support as an annuity. Similarly, while there are situations where purchasing an annuity can offer tax advantages, the main focus of the Life Income Option is on ensuring a consistent income for the beneficiary throughout their lifetime.