Final answer:
If a settlement option is not chosen, the insurance company will use the default option specified in the policy contract, usually a lump sum payment. This provides immediate access to the full benefit amount.
Step-by-step explanation:
If a settlement option is not chosen by the policyowner or the beneficiary, the insurance company will typically use the default settlement option specified in the policy contract. This is usually the lump sum option, where the full benefit amount is paid out in a single payment. This option provides the policyowner or beneficiary with immediate access to the funds, which can be helpful in covering immediate expenses or financial needs.
However, it's important to note that the specific settlement options can vary depending on the insurance company and the type of policy. Some common settlement options include lump sum, annuity payments, or a combination of both.