Current Status Introducing Body:House Bill Number:4060 Primary Sponsor:Felder Committee Number:26 Type of Legislation:GB Subject:Life insurance Residing Body:House Current Committee:Labor, Commerce and Industry Companion Bill Number:545 Computer Document Number:BBM/10506JM.93 Introduced Date:19930414 Last History Body:House Last History Date:19930414 Last History Type:Introduced, read first time, referred to Committee Scope of Legislation:Statewide All Sponsors:Felder Type of Legislation:General Bill
Bill Body Date Action Description CMN Leg Involved
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4060 House 19930414 Introduced, read first time, 26
referred to Committee
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TO AMEND SECTION 38-63-40, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO INDIVIDUAL LIFE INSURANCE AND THE PROVISIONS THAT A LIFE INSURANCE POLICY FOR THE INSURED'S SPOUSE, CHILDREN, OR DEPENDENTS IS NOT SUBJECT TO CLAIMS OF THE INSURED'S CREDITORS, SO AS TO DELETE THE PROVISIONS OF THE SECTION AND TO PROVIDE, AMONG OTHER THINGS, THAT PROCEEDS AND CASH SURRENDER VALUES OF LIFE INSURANCE PAYABLE TO A BENEFICIARY OTHER THAN THE INSURED'S ESTATE IN WHICH SUCH PROCEEDS AND CASH SURRENDER VALUES ARE EXPRESSED TO BE FOR THE PRIMARY BENEFIT OF THE INSURED'S SPOUSE, CHILDREN, OR DEPENDENTS ARE EXEMPT FROM CREDITORS WHETHER OR NOT THE RIGHT TO CHANGE THE BENEFICIARY IS RESERVED AND WHETHER OR NOT THE POLICY IS PAYABLE TO THE INSURED IF THE BENEFICIARY DIES FIRST EXCEPT UNDER CERTAIN CONDITIONS, AND THAT BENEFITS OF ACCIDENT AND DISABILITY CONTRACTS ARE EXEMPT FROM CLAIMS OF THE CREDITORS OF THE INSURED.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-63-40 of the 1976 Code is amended to read:
"Section 38-63-40. The proceeds and cash surrender value of life insurance in the aggregate amount of not more than fifty thousand dollars upon the life of an individual, which has already been or may be taken out, in which it is expressed to be for the primary benefit of the insured's spouse, children, or dependents inure to the use and benefit of the individual or individuals for whose use and benefit it is expressed to be taken out, and the sum or net amount of the insurance becoming due and payable by the terms of the policy is payable to the individual or individuals as stated in this section, free and discharged from the claims of the representatives of the insured or of any of the insured's creditors or a person claiming by, through, or under him or them or any of them unless:
(1) the policy was obtained with the intent to defraud creditors; or
(2) the creditor or representative possesses a valid assignment of the cash surrender value of the policy from the policyholder on a separate form.
In these two instances, the creditor may recover from either the cash surrender value or the proceeds of the life insurance policy of the amount secured by the assignment. (A) Proceeds and cash surrender values of life insurance payable to a beneficiary other than the insured's estate in which such proceeds and cash surrender values are expressed to be for the primary benefit of the insured's spouse, children, or dependents are exempt from creditors of the insured whether or not the right to change the beneficiary is reserved and whether or not the policy is payable to the insured if the beneficiary dies first except:
(1) if the insured has filed a petition in bankruptcy within two years of purchasing the insurance, such proceeds or cash surrender are only exempt as permitted by Section 15-41-30; or
(2) te amount of premiums paid and interest thereon with intent to defraud creditors;
(3) a creditor possessing a valid assignment from the policyowner may recover from either the cash surrender value or the proceeds of the life insurance policy the amount secured by the assignment with interest.
(B) Proceeds of life insurance or annuity contracts, by agreement, may be held by the insurer exempt from claims of the beneficiary's creditors.
(C) Proceeds of group life insurance contracts are exempt from claims of the creditors of the insured.
(D) Benefits of accident and disability contracts are exempt from claims of the creditors of the insured."
SECTION 2. This act takes effect upon approval by the Governor.