The simplest and most effective tactic, Armstrong says, is to buy insurance in an umbrella policy, which has the additional benefit of making the insurance company responsible for defending you.
The downside? "The insurance company could go out of business," he says.
Life insurance is sometimes exempt from creditors, says Jay Tarshis, head of the trusts and estates practice group at Arnstein & Lehr's Chicago office.
"In Illinois," he says, "life insurance payable to a spouse or child tends to be protected, but it may not be if it's payable to someone else, so you have to look at state law -- is it blanket protection or something less?"
Some people put life insurance in an insurance trust, Tarshis says, but like all measures to protect your assets, that has to be done before you have creditors knocking at the door.