If the person who passed is the one with the debt, and if that person was the Insured person on the policy, then creditors can only take life insurance money left if the beneficiary was the Insured's estate.
If the Insured chose a person as the beneficiary, creditors cannot take life insurance money from the beneficiary, unless perhaps the beneficiary was a co-signers on the insured person's debt.
Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482
Generally speaking, Life Insurance proceeds are not taxable or attachable by creditors. As my colleague pointed out, this is true so long as the proceeds are not paid to the person's estate. So long as they are paid to a named beneficiary, and there are no other extenuating circumstances, they cannot be touched. Once the proceeds are invested, however, any interest or other related growth from the initial deposit are subject to taxation and may be attached by the beneficiary's creditors. This is one very important reason to talk with your Insurance Professional and make sure that your beneficiary designations are maintained up to date.
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If the Insured chose a person as the beneficiary, creditors cannot take life insurance money from the beneficiary, unless perhaps the beneficiary was a co-signers on the insured person's debt.