06 LC
37 0079/AP
House
Bill 1484 (AS PASSED HOUSE AND SENATE)
By:
Representative Tumlin of the
38th
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Title 33 of the Official Code of Georgia Annotated, relating to insurance,
so as to clarify the circumstances under which an insurable interest exists with
respect to personal insurance; to codify the common law with respect to certain
insurable interests; to change certain provisions concerning prerequisites for
replacement life insurance exceeding insurance being surrendered; to change
special employee group provisions of group life insurance; to alter required
policy provisions for group life insurance; to provide for related matters; to
repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Title
33 of the Official Code of Georgia Annotated, relating to insurance, is amended
by striking Code Section 33-24-3, relating to insurable interest of personal
insurance, and inserting in its place the following:
"33-24-3.
(a)
An insurable interest, with reference to personal insurance, is an interest
based upon a reasonable expectation of pecuniary advantage through the continued
life, health, or bodily safety of another person and consequent loss by reason
of such
persońs
death or disability or a substantial interest engendered by love and affection
in the case of individuals closely related by blood or by law.
(b)
An individual has an unlimited insurable interest in his or her own life,
health, and bodily safety and may lawfully take out a policy of insurance on his
or
her own life, health, or bodily safety and
have the policy made payable to whomsoever such individual pleases, regardless
of whether the beneficiary designated has an insurable interest.
(c)
The trustee of a trust established by an individual settlor has an insurable
interest in the life of that individual settlor and has the same insurable
interest in the life of any other individual as does such individual settlor.
The trustee of a trust has the same insurable interest in the life of any other
individual as does any beneficiary of the trust with
respect
to proceeds of
insurance on the life of such individual or any portion of such proceeds that
are allocable to such
beneficiarýs
interest in such trust. If multiple beneficiaries of a trust have an insurable
interest in the life of the same individual, the trustee of such trust has the
same aggregate insurable interest in such
individuaĺs
life as such beneficiaries with respect to proceeds of insurance on the life of
such individual or any portion of such proceeds that is allocable in the
aggregate to such
beneficiarieś
interest in the trust.
(c)(d)
A corporation, foreign or domestic, has an insurable interest
in the life of
any individual:
(1)
Holding at least 10 percent of the issued and outstanding shares of such
corporation; or
(2)
In whom the shareholders holding a majority of the issued and outstanding shares
have an insurable interest, whether arising out of their status as shareholders
of the corporation or otherwise,
and
in the life or physical or mental ability of any of its directors, officers, or
employees or the directors, officers, or employees of any of its subsidiaries or
any other person whose death or physical or mental disability might cause
financial loss to the corporation; or, pursuant to any contractual arrangement
with any shareholder concerning the reacquisition of shares owned by him or her
at the time of his or her death or disability, on the life or physical or mental
ability of that shareholder for the purpose of carrying out such contractual
arrangement; or, pursuant to any contract obligating the corporation as part of
compensation arrangements or pursuant to a contract obligating the corporation
as guarantor or surety, on the life of the principal obligor. The trustee of a
trust established by a corporation for the sole benefit of the corporation has
the same insurable interest in the life or physical or mental ability of any
person as does the corporation. The trustee of a trust established by a
corporation providing life, health, disability, retirement, or similar benefits
to employees of the corporation or its affiliates and acting in a fiduciary
capacity with respect to such employees, retired employees, or their dependents
or beneficiaries has an insurable interest in the lives of employees for whom
such benefits are to be provided. As used in this subsection, the term
'employee' shall include any and all directors, officers, employees, or retired
employees. The term 'employee' shall include any former employee, but only for
the purpose of replacing existing life insurance that will be surrendered in
exchange for new life insurance in an amount not exceeding the insurance being
surrendered.
(c.1)
(e)
The insurable interest of a corporation or trustee which has been established
pursuant to subsection
(c)
(d)
of this Code section shall be conveyed automatically to another corporation or
to the trustee of a trust established by such other corporation for its sole
benefit which has acquired by purchase, merger, or otherwise all or part of the
first
corporatiońs
business. A corporation or the trustee of a trust established by such
corporation for its sole benefit may exchange any policy of insurance issued to
itself or to another corporation or the trustee of a trust established by such
other corporation for its sole benefit from which the exchanging corporation has
acquired by purchase, merger, or otherwise all or part of such other
corporatiońs
business for a new policy of insurance issued to itself without establishing a
new insurable interest at the time of such exchange.
(f)
A shareholder in a corporation has an insurable interest in the life of any
other shareholder pursuant to any contractual arrangement between or among such
shareholders concerning the purchase by surviving shareholders of shares owned
by a deceased or disabled shareholder, for the purpose of carrying out such
contractual arrangement.
(g)
A partnership, limited liability company, business trust, or other business
entity established under the laws of any state or of the United States shall
have the same insurable interests as a corporation, as set forth in subsections
(d) and (e) of this Code section, including, without limitation, insurable
interests in such
entitýs
partners, members, or holders of other equity ownership interests and in
officers, directors, employees, and those of any subsidiaries of any such
entity. The partners of a partnership, the owners of a limited liability
company, and the owners of equity interests in any form of business entity have
the same insurable interest in the lives of the other partners, members, or
equity interest owners as do shareholders of corporations.
(d)(h)
An insurable interest must exist at the time the contract of personal insurance
becomes effective but need not exist at the time the loss occurs.
(e)(i)
Any personal insurance contract procured or caused to be procured upon another
individual is void unless the benefits under the contract are payable to the
individual insured or such
individuaĺs
personal representative or to a person having, at the time when the contract was
made, an insurable interest in the individual insured. In the case of a void
contract, the insurer shall not be liable on the contract but shall be liable to
repay to the person or persons who have paid the premiums all premium payments
without interest.
(f)(j)
A charitable institution as defined under Sections 501(c)(3), 501(c)(6),
501(c)(8), and 501(c)(9) of the Internal Revenue Code of 1986 shall have an
insurable interest in the life of any donor.
(k)
The insurable interests set forth in this Code section are not exclusive but are
cumulative of and not in lieu of insurable interests existing in common law and
not expressly set forth in this Code section. No part of this Code section
specifically recognizing any insurable interest shall create any presumption or
implication that such insurable interest did not exist prior to July 1, 2006.
To the contrary, an insurable interest shall be presumed with respect to any
life insurance policy issued prior to July 1, 2006, to any person whose
insurable interest is recognized in this Code
section."
SECTION
2.
Said
title is further amended by striking the introductory paragraph and paragraph
(1) of Code Section 33-24-6.1, relating to prerequisites for replacement life
insurance exceeding insurance being surrendered, and inserting in lieu thereof
the following:
"Notwithstanding
the provisions of subsection
(c)
(d)
of Code Section 33-24-3, subsection (d) of Code Section 33-24-6, or paragraph
(11) of Code Section 33-27-3 which relate to the replacement of existing life
insurance, any new life insurance may exceed the insurance being
surrendered:
(1)
When an entity has a proper interest pursuant to subsection
(c) or
(c.1)
(d) or
(e) of Code Section 33-24-3 and the
authority to effectuate life insurance pursuant to the provisions of paragraph
(4), (5), or (6) of subsection (a) of Code Section 33-24-6;
and"
SECTION
3.
Said
title is further amended by striking paragraph (10) of Code Section 33-27-1,
relating to group life insurance generally, and inserting in lieu thereof the
following:
"(10)
SPECIAL EMPLOYEE
GROUPS.
A
corporation
An
entity or a trustee of a trust established
by a
corporation
an
entity which has an insurable interest in
employees pursuant to subsection
(c)
(d)
of Code Section 33-24-3 and authority to effectuate insurance on employees
pursuant to paragraph (4) or (5) of subsection (a) of Code Section 33-24-6 may
establish an employee group to effectuate group life insurance policies on
employees when such corporation or trustee of a trust is providing life, health,
disability, retirement, or similar benefits to employees, provided that the
premium for such group policies is wholly paid by the corporation or trustee of
the trust and the proceeds of such policies are used to provide supplemental
funding for such employee benefit
plans."
SECTION
4.
Said
title is further amended by paragraph (11) of subsection (a) of Code Section
33-27-3, relating to required group life insurance policy provisions, and
inserting in lieu thereof the following:
"(11)
A
corporation
An
entity or trustee of a trust having an
insurable interest pursuant to subsection
(c)
(d)
of Code Section 33-24-3 and effectuation authority pursuant to paragraph (4) or
(5) of subsection (a) of Code Section 33-24-6, providing life, health,
disability, retirement, or similar benefits to employees may designate the
beneficiary of a group life insurance policy,
providing
provided
that the corporation or trustee of a trust uses the insurance proceeds to
provide life, health, disability, retirement, or similar benefits to such
employees. As used in this paragraph, the term 'employees' shall include
directors, officers, employees, retired employees, or the dependents of such
persons. The term 'employee' shall include any former employee, but only for
the purpose of replacing existing life insurance that will be surrendered in
exchange for new life insurance in an amount not exceeding the insurance being
surrendered."
SECTION
5.
All
laws and parts of laws in conflict with this Act are repealed.