(A) Proceeds and cash surrender values of life insurance payable to a beneficiary other than the insured’s estate in which such proceeds and cash surrender values are expressed to be for the primary benefit of the insured’s spouse, children, or dependents are exempt from creditors of the insured whether or not the right to change the beneficiary is reserved and whether or not the policy is payable to the insured if the beneficiary dies first except:

(1) if the insured has filed a petition in bankruptcy within two years of purchasing the insurance, such proceeds or cash surrender are only exempt as permitted by § 15-41-30; or

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Terms Used In South Carolina Code 38-63-40

  • Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
  • Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
  • insurance: includes annuities. See South Carolina Code 38-1-20
  • Insurer: includes a corporation, fraternal organization, burial association, other association, partnership, society, order, individual, or aggregation of individuals engaging or proposing or attempting to engage as principals in any kind of insurance or surety business, including the exchanging of reciprocal or interinsurance contracts between individuals, partnerships, and corporations. See South Carolina Code 38-1-20
  • Life insurance: means a contract of insurance upon the lives of human beings. See South Carolina Code 38-1-20
  • Policy: means a contract of insurance. See South Carolina Code 38-1-20

(2) the amount of premiums paid and interest thereon with intent to defraud creditors;

(3) a creditor possessing a valid assignment from the policyowner may recover from either the cash surrender value or the proceeds of the life insurance policy the amount secured by the assignment with interest.

(B) Proceeds of life insurance or annuity contracts, by agreement, may be held by the insurer exempt from claims of the beneficiary’s creditors.

(C) Proceeds of group life insurance contracts are exempt from claims of the creditors of the insured.

(D) Benefits of accident and disability contracts are exempt from claims of the creditors of the insured.

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