Final answer:
The cash surrender value of a life insurance policy is protected from creditors when the policy has an irrevocable beneficiary.
Step-by-step explanation:
The cash surrender value of a life insurance policy is not subject to garnishment or legal process in favor of a creditor if the policy has an irrevocable beneficiary. A cash-value (whole) life insurance policy not only provides a death benefit but also accumulates a cash value that can serve as an account for the policyholder's use. Policyholders may borrow against this policy based on the accumulated cash value, which must be repaid with interest.
However, the protection against garnishment for the cash surrender value typically applies when an irrevocable beneficiary is designated. The cash surrender value is generally regarded as protected from the creditors of the policyholder, as long as the policyholder is still alive and the policy includes an irrevocable beneficiary, meaning the beneficiary cannot be changed without their consent.