State RegulationsFL specificDifficulty 3/5
An Orlando insured dies leaving debts. His life policy had no living beneficiary, so the proceeds are payable to his estate. What result?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Florida law (Chapter 627, Florida Statutes), the creditor protection for life proceeds attaches when they are payable to a named beneficiary. When no beneficiary survives and the proceeds are payable to the insured's estate, they become estate assets and are subject to the claims of the insured's creditors in probate. Keeping beneficiary designations current is what preserves the protection - a key reason agents review designations with clients.
Why the other options are wrong
- A) The protection is tied to payment to a named beneficiary; proceeds payable to the estate lose that shield.
- B) Proceeds payable to a known estate do not escheat to the state as unclaimed property.
- D) The insurer does not adjudicate debts; it pays the estate, where creditors' claims are handled in probate.
Memory hook
No beneficiary, no shield - estate proceeds pay debts.