NY Ins L § 3212 (2021)
2021 New York Laws ISC - Insurance Article 32 - Insurance Contracts - Life, Accident and Health, Annuities 3212 - Exemption of Proceeds and Avails of Certain Insurance and Annuity Contracts.

§  3212.  Exemption  of  proceeds  and avails of certain insurance and annuity contracts. (a) In this section:  (1) The term "proceeds and avails", in reference to policies  of  life insurance,  includes  death  benefits, accelerated payments of the death benefit or accelerated  payment  of  a  special  surrender  value,  cash surrender  and loan values, premiums waived, and dividends, whether used in reduction of premiums or in whatever manner used or  applied,  except where  the  debtor has, after issuance of the policy, elected to receive the dividends in cash.  (2) An annuity contract includes any obligation to pay certain sums at stated times, during life or lives, or for a specified  term  or  terms, issued for a valuable consideration, regardless of whether such sums are payable  to  one  or  more  persons,  jointly or otherwise, but does not include payments under a life insurance policy at  stated  times  during life or lives, or for a specified term or terms.  (3)  The  term  "creditor"  includes  every  claimant  under  a  legal obligation contracted or incurred after December thirty-first,  nineteen hundred thirty-nine.  (4)  The  term "execution" includes execution by garnishee process and every action, proceeding or process whereby assets of a  debtor  may  be subjected to the claims of creditors.  (b)  (1) If a policy of insurance has been or shall be effected by any person on his own life in favor of a third person beneficiary,  or  made payable otherwise to a third person, such third person shall be entitled to  the  proceeds  and  avails  of such policy as against the creditors, personal representatives, trustees in bankruptcy and receivers in  state and federal courts of the person effecting the insurance.  (2)  If  a  policy of insurance has been or shall be effected upon the life of another person in favor of the person effecting the same or made payable otherwise to such person, the latter shall be  entitled  to  the proceeds  and  avails  of such policy as against the creditors, personal representatives, trustees in  bankruptcy  and  receivers  in  state  and federal  courts  of  the  person  insured.  If the person effecting such insurance shall be the spouse  of  the  insured,  he  or  she  shall  be entitled to the proceeds and avails of such policy as against his or her own creditors, trustees in bankruptcy and receivers in state and federal courts.  (3)  If  a  policy  of  insurance has been or shall be effected by any person on the life  of  another  person  in  favor  of  a  third  person beneficiary,  or  made  payable  otherwise to a third person, such third person shall be entitled to the proceeds and avails of  such  policy  as against  the creditors, personal representatives, trustees in bankruptcy and receivers in state and federal courts of the person insured  and  of the person effecting the insurance.  (4)  (A)  The  person  insured  pursuant  to  paragraph  one  of  this subsection or the person effecting the insurance other than  the  spouse of  the  insured  pursuant  to  paragraph  two  hereof,  and  the person effecting the insurance pursuant  to  paragraph  three  hereof,  or  the executor  or  administrator of any such persons, or a person entitled to the proceeds or avails of such policy in trust for  such  persons  shall not be deemed a third person beneficiary, assignee or payee.  (B)  A policy shall be deemed payable to a third person beneficiary 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  person  insured  by paying the death benefits to a third person.  (5) This section shall be applicable  whether  or  not  the  right  is reserved  in  any  such  policy to change the designated beneficiary and  whether or not the policy is made payable to the person  whose  life  is insured  if  the  beneficiary,  assignee  or payee shall predecease such person; and no person shall be compelled to exercise any rights, powers, options or privileges under such policy.  (6)  If  a  policy  of  insurance has been or shall be effected by any person on his  own  life  or  upon  the  life  of  another  person,  the policyowner  shall  be entitled to any accelerated payments of the death benefit or accelerated payment of a special  surrender  value  permitted under  such  policy  as against the creditors, personal representatives, trustees in bankruptcy and receivers in state and federal courts of  the policyowner.  (c)  (1)  No  money  or  other benefits payable or allowable under any policy of insurance against disability arising from accidental injury or bodily infirmity or ailment of the person insured, shall  be  liable  to execution  for  the  purpose  of satisfying any debt or liability of the insured, whether incurred  before  or  after  the  commencement  of  the disability, except as provided in subsection (e) hereof.  (2)  With  respect  to  debts  or liabilities incurred for necessaries furnished  the  insured  after  the  commencement  of  disability,   the exemption  shall  not  include  any income payment benefits payable as a result of any disability of the insured, and with respect to  all  other debts  or  liabilities  incurred after the commencement of disability of the insured, the exemption of  income  payment  benefits  payable  as  a result  of  any  disability  of the insured shall not at any time exceed payment at a rate of four hundred dollars per month for  the  period  of such disability.  (3)  When  a  policy  provides  for  lump  sum  payment  because  of a dismemberment or other specific loss of insured, such payment  shall  be exempt from execution of insured's creditors.  (4)  This subsection shall not affect the assignability of any benefit otherwise assignable.  (d) (1) The benefits, rights, privileges and options which, under  any annuity  contract  are  due or prospectively due the annuitant, who paid the consideration for the annuity contract,  shall  not  be  subject  to execution.  (2)  The annuitant shall not be compelled to exercise any such rights, powers or options contained in the annuity contract, nor shall creditors be allowed to interfere  with  or  terminate  the  contract,  except  as provided  in  subsection  (e) hereof and except that the court may order the annuitant to pay to a judgment creditor or apply on the judgment  in installments, a portion of such benefits that appears just and proper to the  court,  with  due  regard  for  the  reasonable requirements of the judgment debtor and his family, if dependent upon him, as  well  as  any payments  required  to be made by the annuitant to other creditors under prior court orders.  (3) The benefits, rights, privileges or options  accruing  under  such contract  to  a  beneficiary  or  assignee shall not be transferable nor subject to commutation. If the benefits are payable periodically  or  at stated  times,  the  same exemptions and exceptions contained herein for the annuitant shall apply with respect to such beneficiary or assignee.  (4) The benefits, rights, privileges  or  options  accruing  under  an annuity  contract  funding a structured settlement which would otherwise be  nontransferable  under  this  subsection  may  be   transferred   in accordance   with  title  seventeen  of  article  five  of  the  general obligations  law.  As  used  in  this  paragraph  the  term  "structured settlement"  means  an  arrangement for periodic payments of damages for personal injuries established by settlement or judgment in resolution of  a tort claim; and the term "periodic payments" shall  include  scheduled future lump sum payments.  (e) (1) Every assignment or change of beneficiary or other transfer is valid,  except  in cases of transfer with actual intent to hinder, delay or defraud creditors, as defined  by  article  ten  of  the  debtor  and creditor  law.  In  such  cases  creditors  shall  have all the remedies provided by such article ten.  (2) (A) Subject to the statute of limitations, the amount of  premiums or  other  consideration paid with actual intent to defraud creditors as provided in article ten of the debtor and creditor  law,  together  with interest  on  such  amount, shall enure to the benefit of creditors from the proceeds of the policy or contract; but  the  insurer  issuing  such policy or contract shall be discharged of liability thereunder by making payments  in  accordance  with  its  terms,  or  in  accordance with any assignment, change of beneficiary or other transfer, unless  before  any such  payment such insurer shall have received written notices, by or on behalf of any such creditor, of a claim to recover any benefits  on  the ground  of  a  transfer  or  payment  made  with  intent to defraud such creditor.  (B) The notice shall specify the amount claimed or sufficient facts to enable the insurer to ascertain such amount, the  insurance  or  annuity contract, the person insured or annuitant, and the transfers or payments sought to be avoided on the ground of fraud.  (3)  (A) Notwithstanding any inconsistent provision of this section or other law, any right of subrogation to benefits to which a local  social services   district,   the   department   of  social  services,  or  the commissioner of health or his designee, shall be entitled shall be valid and  enforceable  to  the  extent  benefits  are  available  under   any individual  accident and health insurance, group or blanket accident and health insurance, or noncancellable disability insurance policy, or  any subscriber  contract  made by a corporation subject to the provisions of article forty-three of this  chapter,  except  that  no  such  right  of subrogation  shall be enforceable if such benefits may be claimed by the department of social services, an appropriate social  services  official or  the  commissioner  of  health or his designee, by agreement or other established procedure, directly from an insurance carrier.  (B) The right of subrogation does not  attach  to  insurance  benefits paid  or provided under any health insurance policy prior to the receipt by the carrier  issuing  such  insurance  of  written  notice  from  the department  of social services, a local social services district, or the commissioner of health or his designee, of the exercise  of  subrogation rights.  (C)  No right of subrogation to insurance benefits available under any health insurance policy shall be enforceable unless  written  notice  of the exercise of such subrogation right is received by the carrier within three years from the date services for which benefits are provided under the  policy  or contract are rendered. An insurer shall not deny a claim made in conformance with paragraph (b) of  subdivision  two  of  section three  hundred  sixty-seven-a  of  the social services law solely on the basis of the date of submission of the claim, the type or format of  the claim  form,  a  failure  to obtain prior authorization, or a failure to present proper documentation at the point-of-sale that is the  basis  of the claim.  (4)  No  terms  of any policy or contract which directly or indirectly prevent or prohibit  the  assignment  of  rights  under  any  policy  or contract  prevent  a  local  social services district, the department of social services, or the commissioner of health  or  his  designee,  from claiming  benefits  to  which  it  shall  be  subrogated.  The  right of  subrogation attaches to any benefits paid or provided under any  policy, plan  or contract upon receipt of written notice of the exercise of such subrogation rights.  (f)  This  section shall likewise apply to group insurance policies or annuity contracts, to the certificates or contracts of fraternal benefit societies, and to the policies or  contracts  of  cooperative  life  and accident insurance companies.