What type of clause restricts the beneficiary from accessing funds until certain conditions are met?

A spendthrift clause is designed to protect the insurance proceeds from being accessed by the beneficiary until certain conditions are fulfilled. This means that it limits the beneficiary's ability to prematurely access or control the funds, ensuring that the intended use of the benefits is preserved, and preventing beneficiaries from recklessly spending or mismanaging the funds. Typically, these clauses are put in place to protect beneficiaries from creditors or to ensure that the money is used for specific purposes, such as education or healthcare.

In contrast, the other types of clauses serve different functions. The incontestability clause guarantees that after a certain period, the insurer cannot dispute the validity of the policy or the claims made under it, regardless of any discrepancies that might have existed at the time of issuance. The reinstatement clause allows a lapsed policy to be renewed under specific conditions, typically related to the payment of overdue premiums. The acceleration clause enables the life insurance policyholder to access a portion of benefits upon a terminal illness diagnosis. Each of these clauses addresses distinct aspects of life insurance, emphasizing the unique purpose and function of a spendthrift clause in protecting the beneficiary's interests.