What happens when a beneficiary dies early on an installment?

When a beneficiary dies early on an installment, being credited with the amount paid on a nonguaranteed basis is the appropriate course of action. This means that rather than terminating the agreement or requiring the full payment of the remaining installments, the amount that has already been paid may be credited toward the total benefit, though it is not guaranteed to be refunded in full.

This approach recognizes that the payments made reflect a contribution towards the intended benefits, while also considering that the agreement may have specific terms regarding payout in the event of such an incident. It allows for a flexible handling of the funds without imposing a burden on the estate or the beneficiaries that may be left behind. This aligns with practices designed to support the financial and emotional circumstances of those involved, mitigating difficulties that may arise from sudden changes in the payer's status.

Other options like stopping payments immediately or needing to pay the full amount would create more stringent financial requirements or penalties. Similarly, just a refund of the initial payment would not adequately reflect the contributions made or provide fair consideration to the family or estate. Thus, the chosen answer provides a balanced resolution to the situation.