Bill Text: VA SB401 | 2014 | Regular Session | Prefiled

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Bill Title: Insurable interest requirement; annuity contracts.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2014-01-13 - Stricken at request of Patron in Commerce and Labor (14-Y 0-N) [SB401 Detail]

Download: Virginia-2014-SB401-Prefiled.html

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14100597D
SENATE BILL NO. 401 Offered January 8, 2014 Prefiled January 7, 2014 A BILL to amend and reenact §38.2-301 of the Code of Virginia, relating to insurable interest requirement; certain annuity contracts. ---------- Patron-- Reeves ---------- Referred to Committee on Commerce and Labor ----------

Be it enacted by the General Assembly of Virginia:

1. That §38.2-301 of the Code of Virginia is amended and reenacted as follows:

§38.2-301. Insurable interest required; life, accident and sickness insurance; certain annuities.

A. Any individual of lawful age may take out an insurance contract upon himself for the benefit of any person. No person shall knowingly procure or cause to be procured any insurance contract upon another individual unless the benefits under the insurance contract are payable to (i) the insured or his personal representative or (ii) a person having an insurable interest in the insured at the time when the insurance contract was made. No person shall knowingly procure or cause to be procured any annuity contract providing benefits to another individual if the annuity contract includes a guaranteed return of premiums or other benefit payable upon the death of the annuitant, unless the benefits under the annuity contract are payable to (a) the annuitant or his personal representative or (b) a person having an insurable interest in the annuitant at the time the annuity contract was made.

B. As used in this section and §38.2-302, "insurable interest" means:

1. In the case of individuals related closely by blood or by law, a substantial interest engendered by love and affection;

2. In the case of other persons, a lawful and substantial economic interest in the life, health, and bodily safety of the insured or annuitant. "Insurable interest" shall not include an interest which that arises only or is enhanced by the death, disability, or injury of the insured or annuitant;

3. In the case of employees of corporations, with respect to whom the corporate employer, a trust established by the corporate employer, or an employee benefit trust is the beneficiary under an insurance contract or annuity contract with a death benefit, the lawful and substantial economic interest required in subdivision 2 of this subsection shall be deemed to exist in (i) key employees and (ii) other employees who have been employed by the corporation for 12 consecutive months, provided that the amount of insurance coverage or death benefit under an annuity contract that provides a death benefit on such other employees shall be limited to an amount which that is commensurate with employer-provided benefits to non-key employees as a group;

4. In the case of a party to a contract or option for the purchase or sale, including a redemption, of an interest in a business proprietorship, partnership, or firm or of shares of stock of a corporation or of an interest in such shares, the lawful and substantial economic interest required in subdivision 2 shall be deemed to exist in each individual party to such contract or option and for the purpose of such contract or option only, in addition to any insurable interest that may otherwise exist as to the life of such individual;

5. In the case of a trustee, other than the trustee of a domestic business trust or foreign business trust, as defined in §13.1-1201, the lawful and substantial economic interest required in subdivision 2 shall be deemed to exist, whether the life insurance policy or annuity contract with a death benefit is owned by a trustee before, on, or after July 1, 2005, in (i) the individual insured or annuitant who established the trust, (ii) each individual in whose life the owner of the trust for federal income tax purposes has an insurable interest, and (iii) each individual in whose life a beneficiary of the trust has an insurable interest; and

6. In the case of an organization described in §501 (c) of the Internal Revenue Code, the lawful and substantial economic interest required in subdivision 2 of this subsection shall be deemed to exist where (i) the insured or proposed insured has either assigned all or part of his ownership rights in a policy or contract to such an organization or has executed a written consent to the issuance of a policy or contract to such organization and (ii) such organization is named in the policy or contract as owner or as beneficiary.