State RegulationsFL specificDifficulty 1/5
A Florida business owner with substantial personal debts names her daughter as beneficiary of her individual life insurance policy. If the insured dies, which statement is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Chapter 627, Florida Statutes, which governs standard provisions of individual life contracts, life insurance proceeds payable to a named beneficiary are protected from the claims of the insured's creditors. This beneficiary protection is a built-in feature of Florida life insurance: it follows from naming a specific beneficiary rather than the insured's own estate, and it is not limited to group policies.
Why the other options are wrong
- A) Creditors of the insured cannot reach proceeds payable to a named beneficiary under Florida's beneficiary-protection rules.
- B) Proceeds are paid to the named beneficiary, not the estate, unless the estate itself is the named beneficiary.
- D) The protection is a feature of Florida life insurance generally, not only of group coverage.
Memory hook
A named beneficiary means shielded proceeds.