(a) When a policy of insurance, whether heretofore or hereafter issued, is effected by any person on his own life or on another life in favor of some person other than himself having an insurable interest therein, 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 such insurance 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; provided, that subject to the statute of limitations the amount of any premiums for said insurance paid with intent to defraud creditors, with interest thereon, shall inure to their benefit from the proceeds of the policy, but the company 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 company shall have written notice by or in behalf of a creditor of a claim to recover for transfer made or premiums paid with intent to defraud creditors with specifications of the amount claimed.
(b) A charitable, benevolent, educational, governmental, or religious institution that is described in § 501(c)(3) or § 170(b)(1)(A) of the Internal Revenue Code or a trust for the benefit of the institution that is qualified as a charitable remainder trust under § 664 or a pooled income fund under § 642(c)(5) of the Internal Revenue Code may acquire an insurable interest in the life of an individual if:
(1) The institution or trust is designated irrevocably as the beneficiary of the insurance proceeds or designated as the owner of the life insurance policy, or both;
(2) The application for the insurance contract is procured and signed by the individual whose life is to be insured; and
(3) Notwithstanding paragraph (1) of this subsection, the insured pays the premiums for the insurance policy for at least 3 years following the issuance of the policy.
(c) Subsection (b) of this section does not prohibit the insured from retaining all ownership rights conferred by the insurance policy, except the right to loan or borrow value during the premium-paying period or at maturity.
CREDIT(S)
(June 19, 1934, 48 Stat. 1175, ch. 672, ch. V, § 16; Aug. 1, 1947, 61 Stat. 711, ch. 427; Mar. 16, 1995, D.C. Law 10-211, § 2, 41 DCR 8027.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 35-521.
1973 Ed., § 35-716.
Legislative History of Laws
Law 10-211, the “Charitable Gift of Life Insurance Proceeds Amendment Act of 1994,” was introduced in Council and assigned Bill No. 10-348, which was referred to the Committee on Consumer and Regulatory Affairs. The Bill was adopted on first and second readings on November 1, 1994, and December 6, 1994, respectively. Signed by the Mayor on December 15, 1994, it was assigned Act No. 10-348 and transmitted to both Houses of Congress for its review. D.C. Law 10-211 became effective on March 16, 1995.
References in Text
Sections 501(c)(3), 170(b)(1)(A), 664 and 642(c)(5) of the Internal Revenue Code, referred to in (b), are codified as 26 U.S.C. §§ 501(c)(3), 170(b)(1)(A), 664 and 642(c)(5), respectively.
Miscellaneous Notes
Application of Law 10-211: Section 3 of D.C. Law 10-211 provided that the act shall be applied retroactively, thereby validating any insurance contract authorized under this act if the individual on whose life the insurance contract was taken is alive on March 16, 1995, even though the insurance contract was entered into before March 16, 1995, and the beneficiary or owner of the policy continues to pay the premiums until maturity.