Under M.G.L. c. 175, § 119A, a Massachusetts life policy provides that proceeds are to be retained by the insurer and paid in installments. What protection does the statute give that arrangement?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
M.G.L. c. 175, § 119A governs proceeds retained by the insurer at the option of the policyowner. Where the contract withholds permission, the beneficiary may not commute, anticipate, or encumber the installments — no lump-sum commutation, no borrowing against the expected payments, no assignment. And where the contract so provides, the installments are exempt from the beneficiary's debts and from judicial process, which is the spendthrift character of the arrangement. The protection exists to keep the policyowner's settlement plan intact against the beneficiary's creditors.
Why the other options are wrong
- A) Free assignment is the opposite of the statute: M.G.L. c. 175, § 119A lets the contract withhold permission to commute, anticipate, or encumber the payments.
- C) The insurer has no duty to surrender the fund on a creditor's demand; where the contract so provides, the payments are exempt from the beneficiary's debts and judicial process.
- D) The installments belong to the beneficiary as named — they do not vest in the estate, and the statutory protection is designed to preserve, not destroy, the plan.
Memory hook
Installments kept on deposit are shielded — the beneficiary cannot spend tomorrow's payments today.