I leave in California and my sister has stage 4 lung cancer and wants to leave me her life insurance policy for money she owes me but she also owes money to many credit card companies (much more than what the policy is worth). I am I responsible for taking that money and paying her credit debt back?

Insurance is paid directly to the beneficiary without going through the estate. The beneficiary would be under no obligation to use it for any specific purpose. So if you are not otherwise obligated to pay her debts, and you are the named beneficiary receiving life insurance proceeds would not make you liable.

Make sure also that the insurance policy's premiums are paid and the policy is in force. Just saying someone is going to leave you their life insurance money is not enough. You also be named as a beneficiary by your sister. Be sure that she does the proper paperwork adding you as her beneficiary. She will need your SSN, current address and date of birth to do this. A life insurance policy needs to have a paper trail. She just can't call up and add you. It has to be done on paper in order to be legal.