What benefit does a Spendthrift Clause provide to the beneficiary of a policy?

A Spendthrift Clause is designed to protect the proceeds of a life insurance policy from the creditors of the beneficiary. When this clause is included in a policy, it prevents creditors from claiming the death benefit or any policy proceeds to satisfy the debts of the beneficiary. This means that upon the policyholder's death, the benefits intended for the beneficiary remain secure and protected from outside claims, allowing the beneficiary to receive the full amount without it being diminished by any debts they may have incurred.

The other options do not accurately reflect the function of a Spendthrift Clause. Investment returns are a feature of investment products, not related to beneficiary protection. Lower premiums refer to the cost of obtaining a policy and do not connect with the specific benefits offered through a Spendthrift Clause. Finally, policy dividends pertain to the distribution of profits from participating policies and are unrelated to creditor protection. Thus, the inclusion of a Spendthrift Clause serves primarily to shield beneficiaries from financial instability due to external claims, reinforcing their financial security during a vulnerable time.