Answer:
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Two is the correct answer.
There are two different methods that allow you to determine the income objective after the death of a client for planning purposes. These approaches are known as the <u>capital liquidation</u> and the <u>capital retention/ conservation.</u> We have a capital conservation method when the death benefits are invested at interest and the amount paid to the beneficiary consists of the interest accrued only. On the other hand, in the capital liquidation method, the payments made to the beneficiary consists of both part interest and part principle during a certain period of time. In this case, payments will cease when the full amount of benefits is exhausted.
