What Is The Spendthrift Clause In Life Insurance?
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63333 POINTSview profilePeggy MaceMost of the U.S.The spendthrift clause in life insurance prevents creditors from taking the proceeds of a life insurance policy from the beneficiary without the funds ever going to the beneficiary. The spendthrift clause allows the carrier to give the death benefit directly to the beneficiary, although they might choose to do it in payments.Answered on May 1, 2013flag this answerBe-Prepaired.jpg)
1575 POINTSview profileChristopher LawrenceInsurance Broker | Financial Consultant, Lawrence Insurance Consulting, Southern New JerseySpendthrift Clause is a clause in most Life Insurance policies which prevents the creditors of a beneficiary from claiming any of the benefits payable to him before he actually receives the money. The purpose of this clause is to keep those to whom he is in debt from taking legal action to require the insurer to pay the proceeds directly to them.Answered on July 30, 2013flag this answer- 63333 POINTSview profilePeggy MaceMost of the U.S.The word, "spendthrift" means someone who spends money in an extravagant, irresponsible way. The spendthrift clause in life insurance protects the irresponsible beneficiary from having creditors pounce on their life insurance proceeds the minute they are received. This might be done by the life insurance company paying that beneficiary in installments.Answered on July 30, 2013flag this answer
37376 POINTSview profileDavid G. Pipes, CLU®, RICP®Business Development Officer, T.D. McNeil Insurance Services, Fresno, CaliforniaA spendthrift clause is occasionally used in a trust. It limits the ability of the beneficiary of a trust to promise all or part of the trust to a third party prior to the death of the person forming the trust. This is done to stop a young beneficiary from foolhardy investments based upon future funding of a trust from his doting aunt in Maine. The trustee is instructed to give money to the beneficiary and to deny all claims by third party interests.Answered on June 13, 2014flag this answer
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