Which clause provides installment payments to the beneficiary and protects proceeds from creditors?

Which clause provides installment payments to the beneficiary and protects proceeds from creditors?

• A. Automatic premium loans
• B. Payor benefit
• C. Spendthrift clause
• D. Disability income

Answer: (C)

The idea being tested is how life insurance proceeds can be paid out in a controlled way while shielding them from creditors. A spendthrift clause does both: it requires the policy proceeds to be paid out to the beneficiary in installments rather than as a lump sum, and it protects those remaining proceeds from being claimed by the beneficiary’s creditors or easily attached or assigned before they’re actually paid. This helps prevent mismanagement of funds and ensures ongoing support for the beneficiary. Other provisions don’t provide this combination—automatic premium loans deal with premium funding, payor benefits cover payment responsibility if the payor can’t continue, and disability income provides income for disability, not protection of proceeds or installment payouts.

The idea being tested is how life insurance proceeds can be paid out in a controlled way while shielding them from creditors. A spendthrift clause does both: it requires the policy proceeds to be paid out to the beneficiary in installments rather than as a lump sum, and it protects those remaining proceeds from being claimed by the beneficiary’s creditors or easily attached or assigned before they’re actually paid. This helps prevent mismanagement of funds and ensures ongoing support for the beneficiary. Other provisions don’t provide this combination—automatic premium loans deal with premium funding, payor benefits cover payment responsibility if the payor can’t continue, and disability income provides income for disability, not protection of proceeds or installment payouts.