§ 3212. Exemption of proceeds and avails of certain insurance and\nannuity contracts. (a) In this section:\n (1) The term "proceeds and avails", in reference to policies of life\ninsurance, includes death benefits, accelerated payments of the death\nbenefit or accelerated payment of a special surrender value, cash\nsurrender and loan values, premiums waived, and dividends, whether used\nin reduction of premiums or in whatever manner used or applied, except\nwhere the debtor has, after issuance of the policy, elected to receive\nthe dividends in cash.\n (2) An annuity contract includes any obligation to pay certain sums at\nstated times, during life or lives, or for a specified term or terms,\nissued for a valuable consideration, regardless of whether such sums are\npayable to one or more persons, jointly or otherwise, but does not\ninclude payments under a life insurance policy at stated times during\nlife or lives, or for a specified term or terms.\n (3) The term "creditor" includes every claimant under a legal\nobligation contracted or incurred after December thirty-first, nineteen\nhundred thirty-nine.\n (4) The term "execution" includes execution by garnishee process and\nevery action, proceeding or process whereby assets of a debtor may be\nsubjected to the claims of creditors.\n (b) (1) If a policy of insurance has been or shall be effected by any\nperson on his own life in favor of a third person beneficiary, or made\npayable otherwise to a third person, such third person shall be entitled\nto the proceeds and avails of such policy as against the creditors,\npersonal representatives, trustees in bankruptcy and receivers in state\nand federal courts of the person effecting the insurance.\n (2) If a policy of insurance has been or shall be effected upon the\nlife of another person in favor of the person effecting the same or made\npayable otherwise to such person, the latter shall be entitled to the\nproceeds and avails of such policy as against the creditors, personal\nrepresentatives, trustees in bankruptcy and receivers in state and\nfederal courts of the person insured. If the person effecting such\ninsurance shall be the spouse of the insured, he or she shall be\nentitled to the proceeds and avails of such policy as against his or her\nown creditors, trustees in bankruptcy and receivers in state and federal\ncourts.\n (3) If a policy of insurance has been or shall be effected by any\nperson on the life of another person in favor of a third person\nbeneficiary, or made payable otherwise to a third person, such third\nperson shall be entitled to the proceeds and avails of such policy as\nagainst the creditors, personal representatives, trustees in bankruptcy\nand receivers in state and federal courts of the person insured and of\nthe person effecting the insurance.\n (4) (A) The person insured pursuant to paragraph one of this\nsubsection or the person effecting the insurance other than the spouse\nof the insured pursuant to paragraph two hereof, and the person\neffecting the insurance pursuant to paragraph three hereof, or the\nexecutor or administrator of any such persons, or a person entitled to\nthe proceeds or avails of such policy in trust for such persons shall\nnot be deemed a third person beneficiary, assignee or payee.\n (B) A policy shall be deemed payable to a third person beneficiary if\nand to the extent that a facility-of-payment clause or similar clause in\nthe policy permits the insurer to discharge its obligation after the\ndeath of the person insured by paying the death benefits to a third\nperson.\n (5) This section shall be applicable whether or not the right is\nreserved in any such policy to change the designated beneficiary and\nwhether or not the policy is made payable to the person whose life is\ninsured if the beneficiary, assignee or payee shall predecease such\nperson; and no person shall be compelled to exercise any rights, powers,\noptions or privileges under such policy.\n (6)
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