What kind of policies might typically include a spendthrift clause?

Permanent life insurance policies often include a spendthrift clause to provide important financial protections for the beneficiaries. A spendthrift clause is designed to limit the access that beneficiaries have to insurance proceeds while they are still living. This serves the purpose of protecting the benefits from being prematurely spent or mishandled.

In permanent life insurance policies, which include whole life and universal life insurance, the death benefit is intended to be a long-term financial resource for the beneficiaries. By including a spendthrift clause, the policy ensures that the funds are managed in a way that can provide extended support, rather than being squandered immediately upon receipt.

This clause can be particularly beneficial for minor beneficiaries or those who may not have the financial responsibility to manage a large sum of money, thereby safeguarding the intent of the policyholder who wishes for the benefits to support the beneficiaries over a period of time, rather than allowing them full access immediately upon death.

While term insurance and other types of policies may have their own specific provisions, they are less likely to feature a spendthrift clause since the death benefit is typically a one-time payment intended for immediate needs upon the policyholder's death.