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The Vermont Statutes Online
Title
08
:
Banking and Insurance
Chapter
103
:
LIFE INSURANCE POLICIES AND ANNUITY CONTRACTS
Subchapter
001
:
GENERALLY
§
3706. Exemption of proceeds-Life insurance
(a) If a policy
of insurance, whether heretofore or hereafter issued, is effected by any person
on his or her own life, or on another life, in favor of a person other than
himself or herself, 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, the lawful beneficiary or assignee thereof, other than the
insured or the person so effecting such insurance or executors or
administrators of such insured or the person so effecting such insurance, 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, and whether
or not the policy is made payable to the person whose life is insured if the
beneficiary or assignee shall predecease such person, and such proceeds and
avails shall be exempt from all liability for any debt of the beneficiary
existing at the time the policy is made available for his or her 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, with specification of the amount claimed along with such
facts as will assist the insurer to identify the particular policy.
(b) For the
purposes of subsection (a) of this section, 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. (1967, No. 344
(Adj. Sess.), § 1 (ch. 2, subch. 1, § 6).)