Question

Which of the following is true concerning the proceeds of a life insurance policy?

a) Protection of proceeds against the beneficiary's creditors
b) Protection of proceeds against the insured's creditors
c) Protection of proceeds against the insured's and the beneficiary's creditors
d) Never protection of proceeds

Answer 1

The proceeds of a life insurance policy are protected against the beneficiary's creditors.

Step-by-step explanation:

The correct answer is option a) Protection of proceeds against the beneficiary's creditors.

When a life insurance policy pays out, the proceeds are typically protected against the beneficiary's creditors. This means that the money cannot be taken by creditors to satisfy the beneficiary's debts. This protection ensures that the intended beneficiaries receive the full benefit of the policy.

However, it's worth noting that the protection of proceeds against the insured's and the beneficiary's creditors is not always guaranteed. There are situations where the proceeds may be subject to certain exceptions, such as cases involving fraud or illegal activity.