What is another term for the cash payment settlement option in insurance?

The term "lump sum" refers to a cash payment settlement option in insurance, which is a single, one-time payment made to the policyholder or beneficiary. This option allows the recipient to receive the full amount of the benefit immediately, rather than spreading it out over time. The advantage of a lump sum payment is that the beneficiary gains immediate access to the funds, which can be critical for paying off debts, covering expenses, or making investments.

In contrast to a lump sum, a structured settlement would involve payments over a period of time rather than a one-time cash payout. A monthly annuity also involves periodic payments, typically at set intervals, which differs from the immediate, complete disbursement characteristic of a lump sum. Partial payout suggests that only a portion of the total amount is being paid out, which does not align with the definition of a lump sum payment. Therefore, recognizing "lump sum" as synonymous with the cash payment settlement option underscores the importance of understanding payment structures in insurance policies.