It isn't necessary for your beneficiary to take a lump sum, although many people prefer that option. The settlement options for life insurance proceeds are practically unlimited. Some of the more common options are as follows:
Your beneficiary may have flexibility within the options, as well. For example, if your beneficiary chooses the fixed-amount option, your beneficiary might elect to receive $250 per month for the first five years, and then $500 per month until the proceeds are depleted. Your beneficiary may also choose a combination of options. For example, your beneficiary could receive the interest option until retirement and then receive the remainder of the benefit as an annuity.
Your company will allow your beneficiary to choose how the proceeds are received when they become payable. If you think it's necessary, you may choose how the beneficiary will receive the proceeds when you purchase the policy. Consult your financial advisor to see what choices your life insurance company offers.