I would look at a period certain with refund. At 97, her life expectancy as per the mortality tables
is only three years. So, a life payout simply pays it all out very quickly. A period certain (longest option as per the contract) with refund, will allow a payment that is partially return
of principle (so not taxable), defer taxation
if possible, but still retain the present value of what’s not distributed for the beneficiaries
And do be sure that she has a beneficiary on file – otherwise the estate, or the trust becomes the beneficiary (at trust rates
– trusts get to the 39.6% bracket at $12,000 or so, where individuals
get to 39.6% at $400,000+(.
If she weren’t forced to take a settlement option simply letting the beneficiaries stretch out over their life expectancy when they inherit would maximize the deferral of taxes, but that’s not an option now.