Usually, a life insurance policy will provide you, the policyholder, with more than one option in addition to your beneficiary receiving a single lump cheque or even a chequebook instead of a single lump check.
Another option is to provide the beneficiary of the policy with the right to receive monthly payments for the rest of your life. These montly payments can also be received by you and a second person for the rest of your life.
The reason for offering these options is simple. Some of the beneficiaries and some of the insureds do not want the task of managing a large lump settlement. It is easier and more manageable for them to receive montly payments instead.
The settlement options are offered to make sure that your policy works the best for you and your beneficiary or beneficiaries.