Which of the following protects life insurance proceeds from creditors of the insured or beneficiary?

The protection of life insurance proceeds from creditors is primarily governed by specific provisions within state laws that explicitly outline how such proceeds are treated when it comes to claims by creditors. The correct answer emphasizes the importance of a specific clause known as the "Life Insurance Proceeds protection clause."

This clause ensures that the benefits provided by life insurance policies are not subject to claims from the insured's creditors upon their death or from the beneficiaries' creditors. This legal safeguard is put in place to ensure that the intended beneficiaries receive the financial support intended for them, regardless of any financial obligations the insured individual may have had.

State laws typically support this protection as they recognize the significance of life insurance in providing financial security for families and dependents. In the case of bankruptcy or other financial difficulties faced by the insured, the life insurance benefits remain safe for the designated beneficiaries, thus fulfilling the intention behind purchasing life insurance.

While other options may mention various legal frameworks, they do not specifically address the targeted protection that the life insurance proceeds clause provides within the context of creditor claims. It is this specific clause that enshrines the protection of those proceeds and distinguishes it from broader regulatory frameworks.