What type of insurance policy allows a beneficiary to be shielded from the insured's creditors?

Life insurance policies are specifically designed to provide financial protection to the beneficiaries when the insured individual passes away. One key feature of life insurance is that the death benefit is generally exempt from the insured's creditors. This means that if the insured owes debts or has outstanding obligations at the time of their death, creditors cannot claim the life insurance proceeds that are paid out to the named beneficiaries.

This characteristic of life insurance serves as an important estate planning tool, as it ensures that the intended recipients can receive the benefits without having those funds diminished by the deceased's financial liabilities. In contrast, health insurance, term insurance, and home insurance do not offer this same level of protection from creditors. Health insurance primarily covers medical expenses, term insurance is a type of life insurance that provides coverage for a specified period, and home insurance protects homeowner property but does not include death benefits to beneficiaries.