Licensed Life Agent, Life and Finance/ 50 States, New York
Life Insurance policies are paid out lump sum to the benificiary, so, this indicates that the benificiary has control of all monies and that the creditors will have no control for garnishment.
Garnishment are for wages yet Life Insurance is a death benefit paid out at time of death of the policy holder to the beneficiary. This is not matter who has control of the policy at any time.
The only time debt collectors can come after life insurance proceeds is if it is the beneficiary who has the debt. This may be because they cosigned a loan with the person who passed away, or it may be because they have their own debts, and the lender found out they have some money to apply toward the loan. Lenders cannot take away life insurance proceeds from a beneficiary to pay for a debt left by the insured person who died.
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Garnishment are for wages yet Life Insurance is a death benefit paid out at time of death of the policy holder to the beneficiary. This is not matter who has control of the policy at any time.