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10  AN ACT concerning exemption of interest in contracts of annuity; amend-
11    ing K.S.A. 40-414 and repealing the existing section.
12
13  Be it enacted by the Legislature of the State of Kansas:
14    Section 1.  K.S.A. 40-414 is hereby amended to read as follows: 40-
15  414. (a) If a life insurance company or fraternal benefit society issues any
16  policy of insurance, including a contract of annuity, or beneficiary certif-
17  icates upon the life of an individual and payable at the death of the in-
18  sured, or in any given number of years, to any person or persons having
19  an insurable interest in the life of the insured, the policy and its reserves,
20  or their present value, shall inure to the sole and separate use and benefit
21  of the beneficiaries named in the policy and shall be free from:
22    (1)  The claims of the insured or the insured's creditors and repre-
23  sentatives;
24    (2)  the claims of any policyholder or the policyholder's creditors and
25  representatives, subject to the provisions of subsection (b);
26    (3)  all taxes, subject to the provisions of subsection (d); and
27    (4)  the claims and judgments of the creditors and representatives of
28  any person named as beneficiary in the policy of insurance.
29    (b)  The nonforfeiture value of a life insurance or annuity policy shall
30  not be exempt from:
31    (1)  Claims of the creditors of a policyholder who files a bankruptcy
32  petition under 11 U.S.C. (section) 101 et seq. on or within one year after the
33  date the life insurance policy is issued on or within two years after
34  the date the annuity policy is issued; or
35    (2)  the claim of any creditor of a policyholder if execution on judg-
36  ment for the claim is issued on or within one year after the date that the
37  life insurance policy is issued or on or within two years after the date
38  the annuity policy is issued.
39    (c)  Nothing in this section shall be construed as restricting the right
40  of the insured to change the beneficiary if the policy reserves that right
41  to the insured.
42    (d)  Nothing in this section shall be construed as exempting from tax-
43  ation any real estate which may at any time be carried by any life insurance
SB 31--Am.
                                     

 1  company as a part of its legal reserve.
 2    (e)  The provisions of subsection (b) shall apply only to life insurance
 3  or annuity policies purchased on or after July 1, 1988.
 4    (f)  The provisions of subsection (b) shall not apply to that portion of
 5  the nonforfeiture value of a life insurance policy, issued on or within one
 6  year of the filing of a bankruptcy petition under 11 U.S.C. (section) 101 et seq.
 7  or an execution on judgment for the claim of the creditor, which is derived
 8  from the surrender of a life insurance policy issued more than one year
 9  prior to such bankruptcy petition or such execution.
10    (g)  The provisions of subsection (b) shall not apply to that por-
11  tion of the nonforfeiture value of an annuity policy, issued on or
12  within two years of the filing of a bankruptcy petition under 11
13  U.S.C. (section) 101 et seq. or an execution on judgment for the claim of the
14  creditor, which is derived from the surrender of an annuity policy
15  issued more than two years prior to such bankruptcy petition or
16  such execution.
17    Sec. 2.  K.S.A. 40-414 is hereby repealed.
18    Sec. 3.  This act shall take effect and be in force from and after its
19  publication in the statute book.