What term describes when a beneficiary receives income from interest while the principal remains with the insurance company?

The term that describes when a beneficiary receives income from interest while the principal remains with the insurance company is capital conservation. This concept is crucial in the context of insurance policies and financial products, where the principal amount invested or the original amount remains intact, allowing for the generation of interest income.

In capital conservation, the focus is on maintaining the original investment amount (the principal) while allowing the beneficiary to enjoy the benefits of the interest earned. This approach is often utilized in life insurance policies with cash value components, where the insurer keeps the principal and pays out interest as income to the policyholder or beneficiary. This principle ensures that the initial investment is preserved while still providing a financial return.

The other terms do not accurately convey this specific arrangement. Capital growth refers to the increase in the value of an investment over time, not the income derived from interest on a retained principal. Capital allocation pertains to the division of assets among various types of investments and strategies. Capital deferment suggests a postponement of the capital or its distribution, which does not align with the ongoing receipt of income from interest.