Which payment method offers a monthly allowance for life instead of a lump sum?

The annuity option is designed to provide a steady stream of income over a specified period or for the lifetime of the annuitant, which distinguishes it from other payment methods that typically offer a one-time lump sum. In the context of life insurance and financial planning, annuities serve the purpose of guaranteeing payments at regular intervals, which can be beneficial for individuals looking for predictable income, especially during retirement.

When an annuity is structured to pay out a monthly allowance for life, it ensures that the individual receives funds over an extended period, which can enhance financial security. This structured payment method is particularly advantageous for those who want to manage their cash flow effectively while minimizing the risk of outliving their financial resources.

In contrast, life insurance policies usually pay out a death benefit to beneficiaries upon the insured's passing, while endowment plans combine life insurance with a savings component but typically offer a lump sum at maturity or upon the death of the policyholder. Group benefit plans tend to provide coverage for a group and may include various other benefits, but they do not specifically focus on offering an income stream for life. Thus, the annuity option stands out as the correct choice for offering a monthly allowance for life.