April 29, 2017

Creditor protection Laws for LI and Annuities

In addition to the tax free/wealth building benefits of life insurance (see Retirement Life™), life insurance also receives creditor protection under state laws and the federal bankruptcy code.

Quick Guide

Alabama

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from the debts of the insured or owner if payable to a person other than the owner, insured or their executors or administrators, except for premiums paid with the intent to defraud creditors. CA §§27-14-29(a), 6-10-8. Proceeds are exempt from debts of owner/beneficiary if that person is the spouse of the insured. CA§27-14-29(b). Cash Value: Same exemptions allowed as for the death benefit. CA §27-14-29(c).

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. CA §6-10-11.

State Exemptions: Same exemptions as in the non-bankruptcy context.

Alaska

NON-BANKRUPTCY

Death Benefit: Life insurance death benefit is considered “earnings, income, cash, or other liquid assets” and is exempt from creditors’ claims for owners, insureds and beneficiaries of the life insurance contract up to a limited amount ($1,750 per month in 2010). The exemption amount is indexed annually. AS §§09.38.115, 09.38.030(b).

Cash Value: An individual may exempt unmatured life insurance contracts owned by the individual (exemption for the owner), but loan values and accumulated dividends on the unmatured life insurance are exempt only up to a limited amount ($12,500 in 2010). AS §09.38.025(a); 8 AAC 95.030. The dollar amounts are indexed and can change. AS §§09.38.115.

BANKRUPTCY

Federal Exemptions: AS law limits the exemptions available in bankruptcy to certain state law exemptions. AS §09.38.055.

State Exemptions: All exemptions from non-bankruptcy context are available in bankruptcy. AS §09.38.055.

Arizona

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from the debts of the owner if payable to a person other than the owner or his/her legal representatives, except for premiums paid with the intent to defraud creditors. ARS§20-1131(A),(B). Proceeds payable to surviving spouse or child of insured are exempt up to $20,000. ARS§33-1126.A.1. Cash Value: Cash surrender value is exempt in the case of a debtor who has owned a policy for over two years and a family dependent has been named as the beneficiary proportional to how named. Premium amounts recoverable or avoidable by a creditor under Title 44, Ch.8, art. 1 shall inure to their benefit from the cash value. ARS §20-1131(D)

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. ARS §33-1133(B).

State Exemptions: Same exemptions as the non-bankruptcy context. ARS §33-1133.

Arkansas

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from the debts of the insured or the owner, if the life insurance is payable to beneficiaries or assignees other than the insured or owner or their executors or administrators (except cases with intent to defraud creditors). ACA §23-79-131(a)(1). Cash Value: Same exemptions as the death benefit. ACA §16-66-209.

BANKRUPTCY

Federal Exemptions: The federal exemptions are available. ACA §16-66-217. However, these exemptions may be capped by the Arkansas Constitution Article 9, Section 1 and 2, which states that one person may exempt up to $200 or a head of a household may exempt up to $500 worth of such property.

State Exemptions: Same exemptions as the non-bankruptcy context. ACA §16-66-218(b)(7).

California

NON-BANKRUPTCY

Death Benefit: Proceeds of a matured life insurance policy are exempt for the beneficiary and the insured to the extent necessary for the support of the judgment debtor, and spouse and dependents of the debtor. Cal. Code of Civ. Proc. §704.100(c).

Cash Value: Cash value is exempt for the insured and beneficiaries to the extent of $10,775 per person of aggregate loan value from the enforcement of a money judgment. Cal. Code of Civ. Proc.§§704.100(a) and 704.100(b).

BANKRUPTCY

Federal Exemptions: No federal bankruptcy exemptions. Cal. Code of Civ. Proc. §703.130.

State Exemptions: One of two alternatives can be chosen as described below.

Alternative A: (consists of exemptions available in non-bankruptcy context.) Cash value is exempt and $10,775 of aggregate loan value is exempt. Cal. Code of Civ. Proc. §704.100. Proceeds are exempt to the extent reasonably necessary for support of judgment debtor, spouse and dependents. Cal. Code of Civ. Proc. §704.100(c).

Alternative B: (Group of state law exemptions only available in bankruptcy.) Any unmatured life insurance contracts owned by debtor may be exempted. Debtor may protect up to $11,075 of his aggregate interest in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual who is a dependent of the debtor. Cal. Code of Civ. Proc. §703. 140(b)(8) and Cal. Code of Civ. Proc. 703.140(b)(7). The debtor may protect to the extent reasonably necessary for the support of the debtor and any dependent, his right to receive, or any property traceable to, a payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date the insured died. Cal. Code of Civ. Proc. §703.140(b)(11)(C).

Colorado

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from the debts of the insured without limitation. CRS §§13-54-102(1)(I)(I)(B), 13-54-106. The first exception is if the proceeds are used to pay off the beneficiary’s debt. CRS §§13-54-102(1)(I)(II). The second exception is if the beneficiary is the estate of the insured. CRS §§13-54-102(1)(I)(III). Cash Value: $50,000 of the cash surrender value of policies is generally exempt for any party from claims by the insured’s creditors. One exception is that the exemption does not apply to increases in money contributed to the policy during the 48 months prior to the issuance of a writ of seizure. CRS §§13-54-102(1)(I)(I)(A), 13-54-106.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. CRS §13-54-107.

State Exemptions: Same exemptions as for the non-bankruptcy context. CRS §1354107.

Connecticut

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from the debts of the insured if payable to someone other than the insured, except if the premiums are paid with the intent to defraud creditors. CGSA §38a-453. Cash Value: Same exemptions as the death benefit except that any accrued interest, dividend or loan value is exempt up to $4,000.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as in the non-bankruptcy context. CGSA §38a-453.

Delaware

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from the debts of the owner or insured if payable to someone other than the insured, owner or their executors or administrators, and from debts of the beneficiary, except for premiums paid with the intent to defraud creditors. Del.Code Ann. Tit. 18 §2725. Cash Value: Same exemptions as the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. Del. Code Ann. Tit. 10, §4914.

State Exemptions: Same exemptions as are available in the non-bankruptcy context.

District of Columbia

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from the debts of the owner or insured, except if the premiums are paid with the intent to defraud creditors. DCA §31-4716. Cash Value: Same exemptions as the death benefit. DCA §31-4716.

BANKRUPTCY

Federal Exemptions: Federal exemptions are available.

State Exemptions: Same exemptions as are available in the non-bankruptcy context. Debtor can exempt cash value and proceeds of life insurance if debtor was dependent of insured and proceeds are reasonably necessary for support. DCA §15-501(a)(11)(c).

Florida

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from the debts of insured or owner if payable to a beneficiary other than the insured, insured’s estate, executors, administrators, or assigns. FSA §222.13(1). Cash Value: Cash surrender value is exempt for any party from claims of any creditor, unless the policy was funded with the intent to defraud creditors. FSA §222.14.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. FSA §222.20.

State Exemptions: Same exemptions as in the non-bankruptcy context. FSA §222.201(1).

Georgia

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of insured or owner if payable to someone other than insured, insured’s estate, executors, administrators, or assigns except if premiums are paid with the intent to defraud creditors. OCGA §§33-25-11, 33-27-7. Cash Value: Same exemptions as the death benefit. OCGA §§33-25-11(c).

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. CGA §44-13-100(b).

State Exemptions: Same exemptions as in the non-bankruptcy context except only up to $2,000 of cash surrender value is exempt. CGA §44-13-100(a)(8) and (a)(11)(c).

Hawaii

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the insured if payable to spouse, child, parent or other dependent of insured, except for premiums paid with intent to defraud creditors, and from debts of such beneficiary. HRS §431:10-232(a),(b). Cash Value: Same exemptions as the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as in the non-bankruptcy context. HRS §651-121.

Idaho

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt for the beneficiary from the creditors of the owner, insured or beneficiary if the life insurance is payable to a beneficiary or assignee other than the insured or owner. Premiums paid with the intent to defraud creditors are subject to claims. IC §41-1833. Cash Value: Same exemptions as the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. IC §11-609.

State Exemptions: Same exemptions as in the non-bankruptcy context. IC §11-609.

Illinois

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the owner or insured when the spouse, children, dependent parent or other dependents of the insured are the beneficiaries. This is true whether the power to change beneficiaries is reserved, or the insured or his estate is a contingent beneficiary. 735 ILCS § 5/12-1001. Cash Value: Same exemptions as the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. 735 ILCS § 5/12-1201.

State Exemptions: Same exemptions as in non-bankruptcy context. 735 ILCS § 5/12-1201.

Indiana

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the insured or his/her spouse if payable to the spouse, child or dependent relative of the insured, except for premiums paid with intent to defraud creditors. IC §27-1-12-14. Cash Value: Same exemptions as the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. IC §34-55-10-1.

State Exemptions: Same exemptions as in non-bankruptcy context. IC §34-55-10-1.

Iowa

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from the debts of the insured if payable to spouse, children or other dependents of the insured. The beneficiary may also exempt $15,000 of the death benefit from claims of his/her creditors. ICA §627.6(6). Cash Value: Exempt for the beneficiary if payable to spouse, children or other dependents of the insured. The amount of the exemption cannot exceed $10,000 if the policy was acquired within two years of the date when exemptions are claimed or filing for bankruptcy. ICA §627.6(6).

BANKRUPTCY

Federal Exemptions: The federal bankruptcy exemptions are not available. ICA §627.10.

State Exemptions: Same exemptions as in the non-bankruptcy context. ICA §627.10.

Kansas

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt for beneficiaries from creditors of the owner or insured or the beneficiary, unless bankruptcy is filed within a year of the policy being issued or if a judgment for the claim is issued within a year. KSA §40-414; also see KSA §60-2313(a)(7). Cash Value: Same exemptions as for the death benefit.

BANKRUPTCY

Federal Exemptions: 11 U.S.C.522(d)(10) is available in addition to state exemptions. KSA §60-2312.

State Exemptions: Same exemptions as in the non-bankruptcy context. KSA §60-2312.

Kentucky

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the insured or owner if payable to someone other than the insured, owner or their executors or administrators, and from debts of the beneficiary, except for premiums paid with intent to defraud creditors. KRS §304.14-300. Cash Value: Same provisions as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available. KRS §427.170.

State Exemptions: Same exemptions as for non-bankruptcy context. KRS §427.150.

Louisiana

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the insured, owner or their estates, from claims by their heirs, and from debts of the beneficiary. The exemption does not apply to debts secured by pledge or assignment of the policy. LSA-R.S. §22:647(A)(I). Cash Value: Cash value exemptions are subject to the same provisions as death benefit. However, only up to $35,000 is exempt if a creditor claim against the policy comes within nine months of the policy being issued. LSA-R.S. §22:647(A)(1) and LSA-R.S. §22:647(A)(2).

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. LSA-R.S. §13:3881(B)(1).

State Exemptions: Same exemptions as in the non-bankruptcy context. LRS-R.S. 22:647(A).

Maine

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from the debts of the owner or insured if payable to someone other than the owner, insured or their executor or administrator, except if the premiums are paid with the intent to defraud creditors. 24-A MRSA §2428. Cash Value: Same exemptions as for the death benefit except that if the debtor is the owner of the policy, the exemption may not exceed $4,000 of the dividend interest or loan value of an unmatured contract.

BANKRUPTCY

Federal Exemptions: Only the federal bankruptcy exemptions in United States Code, Title 11, Section 522(b)(2)(A) and (B) are available. 14 MRSA §4426.

State Exemptions: Same exemptions as in non-bankruptcy context. 14 MRSA §4426.

Maryland

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the insured if payable to spouse, child or dependent relative of the insured. ACM, INS, §16-111; ACM, ET, §8-115. ACM, CJP, §11-504(b)(2). Cash Value: Cash value exemptions are the same as for the death benefit. ACM, INS, §16-111(b).

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. ACM, CJP, §11-504(g).

State Exemptions: Same exemptions as in non-bankruptcy context. ACM, CJP, §11-504(g).

Massachusetts

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from the debts of the owner if the policy is payable to a beneficiary other than the policy owner. Premiums paid with the intent to defraud creditors are subject to creditors claims. ALM Ch.175, §125. Cash Value: Cash value exemptions are the same as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as are available in the non-bankruptcy context.

Michigan

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the insured or owner if payable to someone other than the insured, owner or their executors or administrators. MCLA §500.2207(2). Additional exemptions apply where owner is a husband or wife. MCLA §500.2207(1). Cash Value: Cash value exemptions are the same as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as the non-bankruptcy context.

Minnesota

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from the debts of the owner if payable to someone other than the owner, except if the premiums are paid with the intent to defraud creditors. MSA §61A.12. Cash Value: Same exemptions as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available. MSA §550.371.

State Exemptions: Same exemptions as in the non-bankruptcy context. MSA §550.371.

Mississippi

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the insured, except for premiums paid with intent to defraud creditors. MCA §85-3-11(1). Cash Value: Cash value has the same exemption as the death benefit except that portion of cash value over $50,000 as a result of premiums paid or other payments made within twelve months of filing bankruptcy or issuance of a writ of seizure is not exempt. MCA ((85-3-11(1), 85-3-11(2)(a)).

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. MCA §85-3-2.

State Exemptions: Same exemptions as in the non-bankruptcy context. MCA §85-3-2.

Missouri

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of owner or beneficiary. VAMS §§377.330. Cash Value: Same exemptions as for the death benefit. VAMS §377.330.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. VAMS §513.427. State Exemptions: All exemptions that are true in non-bankruptcy context are true in bankruptcy, except for cash value. The exempt cash value may not exceed $150,000 less any amount applied in payment of premiums or to carry out a non-forfeiture option under any agreement entered into before commencement of bankruptcy proceeding. Also, no exemption occurs if policy is entered into within one year of commencement of the bankruptcy proceedings. VAMS §513.430(8).

Montana

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of owner or insured if payable to someone other than the insured or owner or their executors or administrators, except for premiums paid with intent to defraud creditors. MCA §33-15-511. Cash Value: Cash value exemptions are the same as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. MCA §31-2-106.

State Exemptions: Exemptions as provided in MCA §§31-2-106(1), 25-13-609(4). Exemption may not exceed $4,000 in an unmatured life insurance contract.

Nebraska

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of insured or beneficiary if related to insured by blood or marriage, if payable to someone other than insured’s estate. RSN §44-371. Cash Value: Cash value is exempt for up to $100,000 from all creditors’ claims. RSN §44-371(b)(i).

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. RSN §25-15,105.

State Exemptions: Same exemptions as in non-bankruptcy context, except any cash value in policies initiated or increased through contributions within 3 years of bankruptcy (to the extent of the increase). RSN §25-15,105(I)(b)(ii).

Nevada

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the insured or owner if payable to someone other than the insured or owner, and from debts of the beneficiary, except for premiums paid with intent to defraud creditors. NRS 87B.260. Cash Value: Cash value exemptions are the same as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. NRS §21.090(3).

State Exemptions: Same exemptions as in non-bankruptcy context as long as premiums do not exceed $15,000 per year. Exemption is proportional if premiums exceed $15,000 per year NRS §21.090.

New Hampshire

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the owner if payable to someone other than the owner, except for premiums paid with intent to defraud creditors. NHRSA §408:2. Cash Value: Cash value exemptions are subject to the same provisions as for death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as in non-bankruptcy context. NHRSA §511:2.

New Jersey

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the insured or owner if payable to someone other than the owner, and from debts of the beneficiary, except for premiums paid with intent to defraud creditors. NJSA §§17B: 24-6(b). Cash Value: Cash value exemptions are the same as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as are available in the non-bankruptcy context.

New Mexico

NON-BANKRUPTCY

Death Benefit: Proceeds are not subject to the debts of the deceased except by contract in writing. NMSA §§42-10-5. Cash Value: Same exemptions as for the death benefit. NMSA §§42-10-3, 42-10-6.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as are available in the non-bankruptcy context.

New York

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the insured/owner if payable to a third person beneficiary; proceeds are exempt from debts of the insured if payable to owner, and if the owner is spouse of the insured, proceeds are also exempt from owner’s debts. CLNY, Insurance Law, §3212. Cash Value: Cash value exemptions are the same as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. CLNY, Debtor & Creditor Law, §284.

State Exemptions: Death proceeds and cash value are exempt. CLNY, Debtor & Creditor Law, §284.

North Carolina

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of owner or insured if payable to someone other than the owner. Proceeds payable to spouse and/or children of the insured are exempt from insured’s debts. GSNC §§58-58-95, 58-58-115. See also §1C-1601. Cash Value: Cash value exemptions are the same as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. GSNC §1C-1601(f).

State Exemptions: Same exemptions as in the non-bankruptcy context.

North Dakota

NON-BANKRUPTCY

Death Benefit: Proceeds payable to the deceased, the deceased’s representative, the deceased’s heirs, or the deceased’s estate are exempt from creditors of the decedent. NDCC §26.1-33-40. Cash Value: Cash value payable to the spouse, children, or any relative of the insured dependent, or likely to be dependent, upon the insured for support, is exempt absolutely from the claims of creditors. NDCC §26.1-33-36.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. NDCC §28-22-17.

State Exemptions: Death benefit and cash value are exempt up to a limit of $100,000 for each policy, $200,000 aggregate for all if the policy is payable to spouse, children, or dependent relative, and if policy has been in effect more than a year. Death benefit and cash value are not exempt from domestic relations orders. NDCC §28-22-03.1(3).

Ohio

NON-BANKRUPTCY

Death Benefit: Proceeds of life insurance that are payable to spouse, children, dependent relative, charity, creditor of insured or a trust for benefit of the above are exempt from claims of the creditors of the insured except for premiums paid with intent to defraud creditors. ORC §§3911.10, 2329.66(A)(6)(b). Cash Value: Cash value exemptions are the same as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. ORC §2329.662.

State Exemptions: Same exemptions as are available in the non-bankruptcy context. ORC §2329.662.

Oklahoma

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt for the insured or beneficiary from all creditors, except for premiums paid with intent to defraud creditors. 36 OSA §3631.1(A). Cash Value: Cash value exemptions are the same as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. 31 OSA §1(B).

State Exemptions: Death benefit and cash value receive full exemption.

Oregon

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt for the beneficiary from the creditors of the owner or insured if the policy beneficiary is a person other than the owner, except for premiums paid with intent to defraud creditors. ORS §743.046. Cash Value: Same exemption as for the death benefit. ORS §743. 046.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. ORS §18.300.

State Exemptions: Same exemptions as are available in the non-bankruptcy context. ORS §18.300.

Pennsylvania

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt for the beneficiary from the debts of the insured if the spouse, children, or dependent relative of the insured are the beneficiaries. 42 Pa. CSA §8124(c)(4), (6). Cash Value: Same exemptions as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as are available in the non-bankruptcy context.

Rhode Island

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt for the beneficiary from creditors of the owner or insured if payable to someone other than the insured or owner or their executors or administrators. But premiums paid with the intent to defraud creditors are subject to creditor’s claims. GLRI §27-4-11, §27-4-12. Cash Value: Same exemptions as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as are available in the non-bankruptcy context.

South Carolina

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of the insured if payable other than to insured’s estate and if expressed to be for primary benefit of the spouse, child or dependent of the insured, except for premiums paid with intent to defraud creditors, or if insured/owner filed for bankruptcy within 2 years of purchasing policy. SCST §38-63-40. Cash Value: Same exemptions as for the death benefit except that the cash value of a policy owned by a debtor domiciled in South Carolina may only be exempt up to $4,000, if there is any attachment, levy or sale of property under an intermediary or final process issued by any court or bankruptcy proceeding. SCST §15-41-30(8).

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. SCST §15-41-35.

State Exemptions: Same exemptions as are available in the non-bankruptcy context. SCST §15-41-35.

South Dakota

NON-BANKRUPTCY

Death Benefit: Proceeds, if payable to the insured, spouse, children, or dependent of the insured, are exempt from all creditors up to the limit of $20,000. SDCL §58-12-4. Cash Value: Same exemptions as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. SDCL §43-31-30.

State Exemptions: Same exemptions as available in the non-bankruptcy context. SDCL §43-31-30.

Tennessee

NON-BANKRUPTCY

Death Benefit: Where insured was intestate and policy was acquired by the insured or spouse, proceeds payable to insured’s estate exempt from debts of the insured. If proceeds are payable to estate or trust of testate decedent, exempt from debts of decedent unless specified under will or trust. TCA §56-7-201. Proceeds under spouse-owned policy exempt from debts of insured. TCA §56-7-202. Proceeds payable to spouse, child or dependent relative exempt from debts of insured. TCA §56-7-203. Cash Value: Same exemptions as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. TCA §26-2-112.

State Exemptions: Same exemptions as are available in the non-bankruptcy context. TCA §26-2-112.

Texas

NON-BANKRUPTCY

Death Benefit: Proceeds exempt from debts of insured or beneficiary except for premiums paid with intent to defraud creditors, or if the insured or beneficiary pledged policy as security for debt. VATS Ins. Code. §§1108.051, 1108.052, 1108.053 Cash Value: Same exemptions allowed as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as available in the non-bankruptcy context.

Utah

NON-BANKRUPTCY

Death Benefit: Proceeds exempt from debts of the insured and beneficiary where beneficiary is the spouse or child of the insured, as long as contract was owned by the debtor for over one year. UCA §78-23-5 (xi), (xii). Cash Value: Cash values are exempt (except for payments made within one year of levy by creditor). UCA §78-23-5 (xiii).

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. UCA §78-23-15.

State Exemptions: Same exemptions as in the non-bankruptcy context. UCA §78-23-15.

Vermont

NON-BANKRUPTCY

Death Benefit: Proceeds exempt from debts of insured or owner if payable to someone other than insured or owner or their executors or administrators, and from debts of beneficiary, except for premiums paid with intent to defraud creditors. Vt. Stat. Ann. Tit. 8, § 3706. Cash Value: Same exemptions allowed as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as are available in the non-bankruptcy context.

Virginia

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of insured or owner if payable to someone other than insured, owner or their executors or administrators, except for premiums paid with intent to defraud creditors. VC §38.2-3122. Cash Value: Same exemptions as for the death benefit. VC §38.2-3122, §38.2-3123.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. VC §34-3.1.

State Exemptions: Same exemptions as in the non-bankruptcy context. VC §34-3.1.

Washington

NON-BANKRUPTCY

Death Benefit: Proceeds of life insurance are exempt for the beneficiary from creditors and debts of the insured or owner if payable to someone other than the owner. If premiums are paid with the intent to defraud, they are subject to creditor’s claims. RCW §48.18.410. Cash Value: Same exemptions as for the death benefit. RCW §48.18.410.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as are available in the non-bankruptcy context. RCW §48.23.300.

West Virginia

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of insured or owner if payable to someone other than insured, owner or their executors or administrators, except for premiums paid with intent to defraud creditors. WVC §33-6-27. Cash Value: Same exemptions as for the death benefit. WVC §33-6-27.

BANKRUPTCY CONTEXT

Federal Exemptions: Federal bankruptcy exemptions are not available. WVC §38-10-4.

State Exemptions: Debtor may exempt from the bankruptcy estate any unmeasured life insurance contract owned by debtor, other than a credit life insurance contract. WVC §38-10-4(g).

Wisconsin

NON-BANKRUPTCY

Death Benefit: Proceeds of life insurance payable to a beneficiary who is a dependent of the insured are exempt up to the amount necessary to support the debtor and his or her dependents (from claims of creditors of the insured or beneficiary). WSA §815.18(3)(i). Cash Value: Cash value of a policy on the life of the debtor, a dependent of the debtor, or a person for whom the debtor is a dependent, is exempt up to $150,000 from all creditors claims, but if policy was issued less than 24 months before cause of action or petition, then exempt only up to $4,000. WSA §815.18(3)(f).

BANKRUPTCY CONTEXT

Federal Exemptions: Federal bankruptcy exemptions are available.

State Exemptions: Same exemptions as in the non-bankruptcy context.

Wyoming

NON-BANKRUPTCY

Death Benefit: Proceeds are exempt from debts of insured, owner or beneficiary if beneficiary is someone other than owner, insured or their executors or administrators, except for premiums paid with intent to defraud creditors. WS §26-15-129. Cash Value: Same exemptions as for the death benefit.

BANKRUPTCY

Federal Exemptions: Federal bankruptcy exemptions are not available. WS §1-20-109.

State Exemptions: Same exemptions as are available in the non-bankruptcy context. WS §1-20-109.