What does a "lump sum" payment refer to in insurance terms?

A "lump sum" payment in insurance terms refers to a single large payment made in one transaction rather than through multiple smaller payments spread out over time. This type of payment is often used in various insurance scenarios, such as when a policyholder receives a death benefit or a claim payout. The benefit of a lump sum payment is that it provides immediate access to a significant amount of funds, which can be crucial for fulfilling financial obligations or addressing immediate needs.

In contrast to installment payments, which are made over a period through multiple transactions, a lump sum is completed all at once. This allows the recipient to manage the funds in a way that best suits their situation, whether that involves investing the money, covering expenses, or using it for other purposes. Additionally, it simplifies the transaction process, as there are no ongoing payments to track or manage.