Knowledge that Transforms

THE AMERICAN SCENE presents the juxtaposition of life insurance as a primary investment medium with an economy based on the extension of credit. This circumstance makes the question of the availability of life insurance for the satisfaction of debt of importance to lenders, borrowers, and insureds. Moreover, in nearly all societies, in addition to regular extenders of credit, there are judgment holders who have claims arising from the marital relation, the taxing powers, and the liability system. To the relative rights of these and other claimants under the laws of the United States this study is addressed. The rights of various claimants under the common law is examined from several points of reference. These rights must be considered at two temporal points: before the insurance policy matures and afterward. Another dichotomy is based on the rights of the insured's creditors and the beneficiary's creditors. A complicating circumstance is that the estate policy, the irrevocable beneficiary policy, and the revocable beneficiary policy all create different interests and remedies. The courts of the fifty-odd American jurisdictions have often arrived at varying positions, and the question arises whether this is due to a difference in the facts or to a difference in the judicial construction. We are concerned with the decisions in the fifty states and the District of Columbia in connection with the remedies by judgment. The evolution of a federal bankruptcy law is an important consideration. Although much of the bankruptcy law is simplified because of its federal status, its application involves the consideration of property rights and interests as determined by the state courts. Having resolved the rights of the parties in the absence of exemption statutes, the study then moves to the analysis of the development of laws protecting a debtor's property from his creditors. We are especially concerned with laws which specifically protect life insurance policies. This analysis is complicated by the multiplicity of