What Is The Interest Only Option In Life Insurance? 
The interest only option in life insurance is a settlement option for those who are the beneficiaries of life insurance proceeds . Beneficiaries often have the option of taking the policy proceeds in a lump sum , or in installments over a set period of time . The third , `` interest only '' option , consists of the insurance company hanging onto the death benefit and paying the beneficiary interest at regular intervals . The beneficiary can withdraw money from the death benefit as desired . 