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S1127................................................by JUDICIARY AND RULES
INSURANCE PROCEEDS - Amends existing law to clarify that a section of the
probate code providing how creditors of a deceased may seek payment for
debts of the decedent from nonprobate assets does not apply to certain
statutes exempting certain insurance products from debt.
02/24 Senate intro - 1st rdg - to printing
02/25 Rpt prt - to Com/HuRes
02/28 Rpt out - rec d/p - to 2nd rdg
03/03 2nd rdg - to 3rd rdg
03/06 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Bailey, Brandt, Bunderson, Burkett, Burtenshaw,
Calabretta, Cameron, Compton, Darrington, Davis, Gannon, Geddes,
Goedde, Hill, Ingram, Kennedy, Keough, Little, Lodge, Malepeai,
Marley, McKenzie, McWilliams, Noble(Anderson), Noh, Pearce,
Richardson, Schroeder, Sorensen, Stegner, Stennett, Sweet, Werk,
Williams
NAYS -- None
Absent and excused -- None
Floor Sponsor - Goedde
Title apvd - to House
03/07 House intro - 1st rdg - to Bus
03/20 Rpt out - rec d/p - to 2nd rdg
03/21 2nd rdg - to 3rd rdg
03/27 3rd rdg - PASSED - 65-0-5
AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Bieter, Black,
Block, Boe, Bolz, Bradford, Campbell, Cannon, Collins, Cuddy, Deal,
Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge, Field(18),
Field(23), Gagner, Garrett, Harwood, Henbest(Bray), Jaquet, Jones,
Kellogg, Kulczyk, Lake, Langford, Langhorst, Martinez, McGeachin,
McKague, Meyer, Miller, Mitchell, Moyle, Nacarrato, Nielsen,
Raybould, Ridinger, Ring, Ringo, Roberts, Robison, Rydalch, Sali,
Sayler, Schaefer, Shepherd, Shirley, Skippen, Smith(30), Smith(24),
Smylie, Snodgrass, Trail, Wills, Wood, Mr. Speaker
NAYS -- None
Absent and excused -- Bell, Clark, Crow, Stevenson, Tilman
Floor Sponsor - Douglas
Title apvd - to Senate
03/28 To enrol
03/31 Rpt enrol - Pres signed
04/01 Sp signed
04/02 To Governor
04/08 Governor signed
Session Law Chapter 248
Effective: 07/01/03
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE SENATE
SENATE BILL NO. 1127
BY JUDICIARY AND RULES COMMITTEE
1 AN ACT
2 RELATING TO INSURANCE; AMENDING SECTION 41-1833, IDAHO CODE, TO CLARIFY THAT
3 THE SECTION IS NOT AFFECTED BY SECTION 15-6-107, IDAHO CODE; AMENDING SEC-
4 TION 41-1834, IDAHO CODE, TO CLARIFY THAT THE SECTION IS NOT AFFECTED BY
5 SECTION 15-6-107, IDAHO CODE; AMENDING SECTION 41-1835, IDAHO CODE, TO
6 CLARIFY THAT THE SECTION IS NOT AFFECTED BY SECTION 15-6-107, IDAHO CODE;
7 AND AMENDING SECTION 41-1836, IDAHO CODE, TO CLARIFY THAT THE SECTION IS
8 NOT AFFECTED BY SECTION 15-6-107, IDAHO CODE, AND TO MAKE TECHNICAL COR-
9 RECTIONS.
10 Be It Enacted by the Legislature of the State of Idaho:
11 SECTION 1. That Section 41-1833, Idaho Code, be, and the same is hereby
12 amended to read as follows:
13 41-1833. EXEMPTION OF PROCEEDS -- LIFE INSURANCE. (1) If a policy of
14 insurance, whether heretofore or hereafter issued, is effected by any person
15 on his own life, or on another life, in favor of a person other than himself,
16 or, except in cases of transfer with intent to defraud creditors, if a policy
17 of life insurance is assigned or in any way made payable to any such person,
18 the lawful beneficiary or assignee thereof, other than the insured or the per-
19 son so effecting such insurance or executors or administrators of such insured
20 or the person so effecting such insurance, shall be entitled to its proceeds
21 and avails against the creditors and representatives of the insured and of the
22 person effecting the same, whether or not the right to change the beneficiary
23 is reserved or permitted, and whether or not the policy is made payable to the
24 person whose life is insured if the beneficiary or assignee shall predecease
25 such person, and such proceeds and avails shall be exempt from all liability
26 for any debt of the beneficiary existing at the time the policy is made avail-
27 able for his use: provided, that subject to the statute of limitations, the
28 amount of any premiums for such insurance paid with intent to defraud credi-
29 tors, with interest thereon, shall inure to their benefit from the proceeds of
30 the policy; but the insurer issuing the policy shall be discharged of all lia-
31 bility thereon by payment of its proceeds in accordance with its terms,
32 unless, before such payment, the insurer shall have received written notice at
33 its home office, by or in behalf of a creditor, of a claim to recover for
34 transfer made or premiums paid with intent to defraud creditors, with specifi-
35 cation of the amount claimed.
36 (2) For the purposes of subsection (1) above, a policy shall also be
37 deemed to be payable to a person other than the insured if and to the extent
38 that a facility-of-payment clause or similar clause in the policy permits the
39 insurer to discharge its obligation after the death of the individual insured
40 by paying the death benefits to a person as permitted by such clause.
41 (3) This section shall not be affected by the terms of section 15-6-107,
42 Idaho Code.
2
1 SECTION 2. That Section 41-1834, Idaho Code, be, and the same is hereby
2 amended to read as follows:
3 41-1834. EXEMPTION OF PROCEEDS -- DISABILITY INSURANCE. Except as may
4 otherwise be expressly provided by the policy or contract, the proceeds or
5 avails of all contracts of disability insurance and of provisions providing
6 benefits on account of the insured's disability which are supplemental to life
7 insurance or annuity contracts heretofore or hereafter effected shall be
8 exempt from all liability for any debt of the insured, and from any debt of
9 the beneficiary existing at the time the proceeds are made available for his
10 use.
11 This section shall not be affected by the terms of section 15-6-107, Idaho
12 Code.
13 SECTION 3. That Section 41-1835, Idaho Code, be, and the same is hereby
14 amended to read as follows:
15 41-1835. EXEMPTION OF PROCEEDS -- GROUP INSURANCE. (1) A policy of group
16 life insurance or group disability insurance or the proceeds thereof payable
17 to the individual insured or to the beneficiary thereunder, shall not be lia-
18 ble, either before or after payment, to be applied by any legal or equitable
19 process to pay any debt or liability of such insured individual or his benefi-
20 ciary or of any other person having a right under the policy. The proceeds
21 thereof, when not made payable to a named beneficiary or to a third person
22 pursuant to a facility-of-payment clause, shall not constitute a part of the
23 estate of the individual insured for the payment of his debts.
24 (2) This section shall not apply to group insurance issued pursuant to
25 this code to a creditor covering his debtors, to the extent that such proceeds
26 are applied to payment of the obligation for the purpose of which the insur-
27 ance was so issued.
28 (3) This section shall not be affected by the terms of section 15-6-107,
29 Idaho Code.
30 SECTION 4. That Section 41-1836, Idaho Code, be, and the same is hereby
31 amended to read as follows:
32 41-1836. EXEMPTION OF PROCEEDS -- ANNUITY CONTRACTS -- ASSIGNABILITY OF
33 RIGHTS. (1) The benefits, rights, privileges and options which under any annu-
34 ity contract heretofore or hereafter issued are due or prospectively due the
35 annuitant, shall not be subject to execution nor shall the annuitant be com-
36 pelled to exercise any such rights, powers, or options, nor shall creditors be
37 allowed to interfere with or terminate the contract, except:
38 (a) As to amounts paid for or as premium on any such annuity with intent
39 to defraud creditors, with interest thereon, and of which the creditor has
40 given the insurer written notice at its home office prior to the making of
41 the payments to the annuitant out of which the creditor seeks to recover.
42 Any such notice shall specify the amount claimed or such facts as will
43 enable the insurer to ascertain such amount, and shall set forth such
44 facts as will enable the insurer to ascertain the annuity contract, the
45 annuitant and the payments sought to be avoided on the ground of fraud.
46 (b) The total exemption of benefits presently due and payable to any
47 annuitant periodically or at stated times under all annuity contracts
48 under which he is an annuitant, shall not at any time exceed one thousand
49 two hundred and fifty dollars ($1,250) per month for the length of time
50 represented by such installments, and that such periodic payments in
3
1 excess of one thousand two hundred and fifty dollars ($1,250) per month
2 shall be subject to garnishee execution to the same extent as are wages
3 and salaries.
4 (c) If the total benefits presently due and payable to any annuitant
5 under all annuity contracts under which he is an annuitant, shall at any
6 time exceed payment at the rate of one thousand two hundred and fifty dol-
7 lars ($1,250) per month, then the court may order such annuitant to pay to
8 a judgment creditor or apply on the judgment, in installments, such por-
9 tion of such excess benefits as to the court may appear just and proper,
10 after due regard for the reasonable requirements of the judgment debtor
11 and his family, if dependent upon him, as well as any payments required to
12 be made by the annuitant to other creditors under prior court orders.
13 (2) If the contract so provides, the benefits, rights, privileges or
14 options accruing under such contract to a beneficiary or assignee shall not be
15 transferable nor subject to commutation, and if the benefits are payable peri-
16 odically or at stated times, the same exemptions and exceptions contained
17 herein for the annuitant, shall apply with respect to such beneficiary or
18 assignee.
19 (3) An annuity contract within the meaning of this section shall be any
20 obligation to pay certain sums at stated times, during life or lives, or for a
21 specified term or terms, issued for a valuable consideration, regardless of
22 whether or not such sums are payable to one (1) or more persons, jointly or
23 otherwise, but does not include payments under life insurance contracts at
24 stated times during life or lives, or for a specified term or terms.
25 (4) This section shall not be affected by the terms of section 15-6-107,
26 Idaho Code.
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STATEMENT OF PURPOSE
RS 13057
Idaho Code Section 15-6-107, both in its existing state and as it
is proposed to e amended by Senate Bill 1031, refers to how
creditors of a deceased may seek payment for debts of the decedent
from non-probate assets. That Section is primarily procedural.
Since 1961, Idaho has had provisions exempting certain insurance
products from debts, in Sections 41-1833 through 1836. Although
the enactment of Section 15-6-107 in 1972, and its amendment in
this session, is not believed to affect those exemptions, this bill
makes that lack of effect express in the relevant sections
themselves.
FISCAL IMPACT
This bill will have no fiscal impact.
Contact: Robert L. Aldridge
1209 North Eighth Street
Boise, Idaho 83702-4297
(208) 336-9880
e-mail: rlaldridge@hotmail.com
STATEMENT OF PURPOSE/FISCAL NOTE S 1127