State RegulationsFL specificDifficulty 1/5
Under Florida's standard provisions for individual life contracts, what is the purpose of the protection of beneficiaries from creditors?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under Chapter 627, Florida Statutes, the standard provisions governing individual life contracts protect proceeds payable to a named beneficiary from the claims of the insured's creditors. The protection exists so that the insured's family or other chosen beneficiaries actually receive the death benefit rather than seeing it absorbed by the insured's outstanding debts; it has nothing to do with the insurer's liability or the beneficiary's taxes.
Why the other options are wrong
- A) The provision shields the beneficiary's recovery, not the insurer; the insurer was never liable for the insured's debts.
- C) The protection concerns creditors of the insured, not the beneficiary's tax obligations.
- D) The protection keeps proceeds out of the insured's estate and out of probate when a beneficiary is named.
Memory hook
The shield guards the check for the beneficiary, not the insurer or the tax man.