State RegulationsFL specificDifficulty 1/5
A Florida policyowner with large debts dies. His life policy names his daughter as beneficiary. What can his creditors do against the death proceeds?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under Florida law (Chapter 627, Florida Statutes), life insurance death proceeds payable to a named beneficiary are generally protected from the claims of the insured's creditors. This standard-provision protection is a major reason families use life insurance to secure income regardless of the insured's debts at death. The protection follows the beneficiary designation, so keeping a living beneficiary named preserves it.
Why the other options are wrong
- A) Proceeds payable to a named beneficiary do not pass through the insured's estate for debt payment.
- C) The protection operates by law, not by the beneficiary's consent.
- D) Creditors cannot force surrender of the policy to intercept the proceeds.
Memory hook
Named beneficiary = creditors left at the door.