§3706. Exemption of proceeds-Life insurance

Link to law: http://legislature.vermont.gov/statutes/section/08/103/03706
Published: 2015

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The Vermont Statutes Online



Banking and Insurance








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).)