Which statement about spendthrift statutes is correct?

Which statement about spendthrift statutes is correct?

• A. A spendthrift statute protects the life insurance proceeds from the claims of the insured's creditors.
• B. A spendthrift statute protects the life insurance proceeds from the claims of the policy owner's creditors.
• C. A spendthrift statute protects the life insurance proceeds from the claims of both the insured's and beneficiary's creditors.
• D. A spendthrift statute protects the life insurance proceeds from the claims of the beneficiary's creditors.

Answer: (D)

Spendthrift provisions in life insurance are designed to shield the beneficiary’s right to receive the proceeds from being claims of creditors. They prevent creditors of the beneficiary from forcing payout or attachment of the death benefit and typically restrict the beneficiary’s ability to assign future payments. That protective effect is why the correct statement is that the proceeds are protected from the claims of the beneficiary’s creditors. The protection is not aimed at shielding the insured’s or the policy owner’s creditors, and it does not extend to both parties in general.

Spendthrift provisions in life insurance are designed to shield the beneficiary’s right to receive the proceeds from being claims of creditors. They prevent creditors of the beneficiary from forcing payout or attachment of the death benefit and typically restrict the beneficiary’s ability to assign future payments. That protective effect is why the correct statement is that the proceeds are protected from the claims of the beneficiary’s creditors. The protection is not aimed at shielding the insured’s or the policy owner’s creditors, and it does not extend to both parties in general.