Interest on death benefit proceeds is payable as which of the following?

The correct answer highlights that interest on death benefit proceeds is assessed at a specific rate from the date of the insured's death and added to the death benefit proceeds. This reflects a common practice in insurance, where beneficiaries are entitled to interest on the death benefit amount for the period it remains unpaid, recognizing the time value of money and compensating the beneficiaries for the delay in receiving their funds.

In many jurisdictions, including Rhode Island, insurers are required to pay interest on death benefits to ensure that beneficiaries are not financially disadvantaged due to the time it takes to process claims. The specific interest rate mentioned in the correct answer corresponds with legislative guidelines, which can vary by state but often fall within a defined range to protect consumers.

Providing this interest is important because it fulfills the insurer's responsibility to act in good faith toward the policyholder's beneficiaries, ensuring they receive fair compensation during a stressful time. Therefore, the inclusion of interest in the total payout allows beneficiaries to benefit from the accrual of interest in a manner similar to what they would expect from any financial asset.

The other options do not align with standard insurance practices or statutory requirements regarding interest on death benefits, making them less accurate.