A Lump Sum Settlement Option Is Usually the Best Choice,even

question 11

True/False

A lump sum settlement option is usually the best choice,even if a beneficiary is not very good at managing sums of money.

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Definitions:

Effective Interest Rate

The equivalent annually compounded rate of interest.

Lump Sum

A single payment made at a particular time, as opposed to a series of payments made over time.

Monthly Compounded

Refers to the process of calculating interest on both the initial principal and the accumulated interest from previous periods on a monthly basis.

Nominal Rate

The interest rate before adjustments for inflation, often referred to as the stated or face value rate of interest.