What is a spendthrift clause designed to do?

A spendthrift clause is a provision included in some insurance policies and trusts that specifically aims to protect the benefits granted to beneficiaries from being accessed by creditors or mismanaged by the beneficiaries themselves. By incorporating a spendthrift clause, the policy prevents beneficiaries from selling, borrowing against, or otherwise encumbering their right to the benefits before the insured's death. This ensures that the funds are preserved for their intended purpose, which is to provide financial support for the beneficiaries following the death of the insured, rather than allowing those funds to be squandered or mishandled.

This protective measure is particularly important in situations where a beneficiary may not have the financial discipline to manage significant sums of money or could be subject to legal judgments that would otherwise allow creditors to claim those benefits. Therefore, the spendthrift clause effectively safeguards the funeral and burial insurance proceeds until they are disbursed according to the terms of the policy following the insured's death.