State RegulationsFL specificDifficulty 2/5
A Florida insured dies with large unpaid business debts. Before paying the death claim, the insurer receives a written demand from a judgment creditor of the insured to pay him instead. What must the insurer do?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Chapter 627, Florida Statutes, individual life contracts carry standard provisions protecting beneficiaries: proceeds payable to a named beneficiary are not subject to the claims of the insured's creditors, so the insurer's duty is to pay the beneficiary, not to hold the money for creditors or funnel it through probate. A creditor's demand letter does not create a right to the death benefit; the insurer pays according to the contract.
Why the other options are wrong
- A) There is no duty to withhold; the proceeds are protected from the insured's creditors and belong to the beneficiary.
- B) Paying into the estate would expose the proceeds to creditor claims; the protection exists precisely to avoid that route when a beneficiary is named.
- D) No bond or security is required of a named beneficiary before payment of a death claim.
Memory hook
Creditor letters do not redirect checks: pay the beneficiary.