Wills and Trusts

Wyatt, Tarrant & Combs, LLP

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Estate of Clendenon – Receipts from Health Insurance Exempt from Creditors in Tennessee

You may know that the death benefit of a life insurance policy is exempt from the claims of creditors when paid to an insolvent estate where the beneficiaries are the spouse and/or children of the deceased.  See T.C.A. § 56-7-201.  You may also know that the cash surrender values of insurance policies and annuities are protected from creditors if the beneficiaries of the policies are the spouse and/or children of the insured or annuitant. See T.C.A. § 56-7-203.

What you probably do not know is that benefits received from health, accident or disability insurance policies are exempt from claims of creditors both during life and following the insured’s death.  See T.C.A. § 26-2-110.

In a recent case, a young man (29 years old) suffering from cancer was treated at an “out-of-network” facility.  The insured filed claims based on his medical bills with his health insurance provider.  A number of claims were processed and nearly $50,000 was paid directly to the insured pursuant to Continue reading