What does the 'interest only' option allow the policy owner to do?

The 'interest only' option allows the policy owner to leave the policy proceeds with the insurer, where the insurer pays interest on the amount left. This mechanism is typically used when a beneficiary prefers to receive interest payments rather than taking the full death benefit as a lump sum. By opting for this choice, the principal remains with the insurer, potentially earning interest over time, which can be beneficial if the beneficiary wants to postpone making a decision on how to use the death benefit.

This option does not provide an immediate lump sum payment, nor does it involve transferring the policy to another owner or cancellation of the policy. Each of those alternatives serves different purposes and does not align with the characteristics of the 'interest only' provision.