17B:24-6. Exemption of
proceeds--life insurance
a. If a policy of
insurance, whether heretofore or hereafter issued, is affected by any person on
his own life, or on another life, in favor of a person other than himself, or,
except in cases of transfer with intent to defraud creditors, if a policy of
life insurance is assigned or in any way made payable to any such person, then
the lawful beneficiary, assignee or payee of such policy, shall be entitled to
its proceeds and avails against the creditors and representatives of the
insured and of the person effecting the same, whether or not the right to
change the beneficiary is reserved or permitted, or the policy is made payable
to the person whose life is insured or to the executors or administrators of such
person if the beneficiary shall predecease such person.
Except however the
foregoing shall not be applicable if the lawful beneficiary, assignee or payee
of such policy is any of the following:
(1) The insured,
(2) The person so
effecting such insurance, or
(3) The executors or
administrators of such insured or the person so effecting such insurance.
b. Such proceeds and
avails shall be exempt from any liability for any debt of the beneficiary
existing at the time the proceeds and avails become available for his use;
provided that, subject to the statute of limitations, the amount of any
premiums for such insurance paid with intent to defraud creditors, with
interest thereon, shall inure to their benefit from the proceeds of the policy;
but the insurer issuing the policy shall be discharged of all liability thereon
by payment of its proceeds in accordance with its terms, unless, before such
payment, the insurer shall have received written notice at its home office, by
or in behalf of a creditor, of a claim to recover for transfer made or premiums
paid with intent to defraud creditors setting forth such facts as will enable
the insurer to ascertain the particular policy.
c. For the purposes of
subsections a. and b. above, a policy shall also be deemed to be payable to a
person other than the insured if and to the extent that a facility-of-payment
clause or similar clause in the policy permits the insurer to discharge its
obligation after the death of the individual insured by paying the death
benefits to a person as permitted by such clause.
