I am sorry for your loss BellBarbara.
Insurance companies went to this way to pay off beneficiaries years ago. As I recall the $ goes into a MMF and you get checkwriting priviledge to get at your own money. You can write a check to yourself for the entire amount on day one so there is not really much of a hassle.
Yup. Write a check for 100% and close it out.
The money is safe. They might actually pay a higher rate than the bank account (usually do). There are all sorts of protection plans in place for cash accounts at an insurance company. I wouldn't lose sleep over this.