What is a common clause that protects beneficiaries from creditors?

The spendthrift clause is a common provision found in trusts and certain types of life insurance policies designed to protect the rights of beneficiaries from creditors. This clause restricts beneficiaries from assigning their interests in the trust or policy, effectively preventing creditors from accessing the funds or benefits before they have been paid out to the beneficiaries. By implementing this clause, the intent is to ensure that the assets are preserved for the intended beneficiaries and not taken by creditors due to debts or legal judgments against them.

In contrast, other clauses listed do not serve the same purpose. The insurable interest clause relates to ensuring that the policyholder has a valid interest in the life being insured, the grace period clause allows for a period of time to pay premiums without losing coverage, and the waiver of premium clause enables the policyholder to maintain coverage without paying premiums during times of disability or hardship. None of these provide the same protective measure against creditors that a spendthrift clause does.