AN ACT
Relating to life insurance for the benefit of certain tax exempt organizations;
and amending RCW 48.18.030.
BE IT ENACTED BY THE LEGISLATURE
OF THE STATE OF WASHINGTON:
Sec.
1. RCW
48.18.030 and 1973 1st ex.s. c 89 s 3 are each amended to read as follows:
(1)
Any individual of competent legal capacity may procure or effect an insurance
contract upon his own life or body for the benefit of any person. But no
person shall procure or cause to be procured any insurance contract upon the
life or body of another individual unless the benefits under such contract are
payable to the individual insured or his personal representatives, or to a
person having, at the time when such contract was made, an insurable interest
in the individual insured.
(2) If
the beneficiary, assignee or other payee under any contract made in violation
of this section receives from the insurer any benefits thereunder accruing upon
the death, disablement or injury of the individual insured, the individual
insured or his executor or administrator, as the case may be, may maintain an
action to recover such benefits from the person so receiving them.
(3)
"Insurable interest" as used in this section and in RCW 48.18.060
includes only interests as follows:
(a) In
the case of individuals related closely by blood or by law, a substantial
interest engendered by love and affection; and
(b) in
the case of other persons, a lawful and substantial economic interest in having
the life, health or bodily safety of the individual insured continue, as
distinguished from an interest which would arise only by, or would be enhanced
in value by, the death, disablement or injury of the individual insured.
(c) An
individual heretofore or hereafter party to a contract or option for the
purchase or sale of an interest in a business partnership or firm, or of shares
of stock of a close corporation or of an interest in such shares, has an
insurable interest in the life of each individual party to such contract and
for the purposes of such contract only, in addition to any insurable interest
which may otherwise exist as to the life of such individual.
(d) A
guardian, trustee or other fiduciary has an insurable interest in the life of
any person for whose benefit the fiduciary holds property, and in the life of
any other individual in whose life such person has an insurable interest.
(e)
Subject to rules adopted under subsection (4) of this section, upon joint
application with a nonprofit organization for, or transfer to a nonprofit
organization of, an insurance policy on the life of a person naming the
organization as owner and beneficiary, a nonprofit organization's interest in
the life of a person if:
(i)
The nonprofit organization was established exclusively for religious,
charitable, scientific, literary, or educational purposes, or to promote
amateur athletic competition, to conduct testing for public safety, or to
prevent cruelty to children or animals; and
(ii)
The nonprofit organization:
(A)
Has existed for a minimum of five years; or
(B)
Has been issued a certificate of exemption to conduct a charitable gift annuity
business under RCW 48.38.010, or is authorized to conduct a charitable gift
annuity business under RCW 28B.10.485; or
(C)
Has been organized, and at all times has been operated, exclusively for benefit
of, to perform the functions of, or to carry out the purposes of one or more
nonprofit organizations described in (e)(ii)(A) or (B) of this subsection and
is operated, supervised, or controlled by or in connection with one or more
such nonprofit organizations; and
(iii)
For a joint application, the person is not an employee, officer, or director of
the organization who receives significant compensation from the organization
and who became affiliated with the organization in that capacity less than one
year before the joint application.
(4)
The commissioner may adopt rules governing joint applications for, and
transfers of, life insurance under subsection (3)(e) of this section. The
rules may include:
(a)
Standards for full and fair disclosure that set forth the manner, content, and
required disclosure for the sale of life insurance issued under subsection
(3)(e) of this section; and
(b)
For joint applications, a grace period of thirty days during which the insured
person may direct the nonprofit organization to return the policy and the
insurer to refund any premium paid to the party that, directly or indirectly,
paid the premium; and
(c)
Standards for granting an exemption from the five-year existence requirement of
subsection (3)(e)(ii)(A) of this section to a private foundation that files
with the insurance commissioner documents, stipulations, and information as the
insurance commissioner may require to carry out the purpose of subsection
(3)(e) of this section.
(5)
Nothing in this section permits the personal representative of the insured's
estate to recover the proceeds of a policy on the life of a deceased insured
person that was applied for jointly by, or transferred to, an organization
covered by subsection (3)(e) of this section, where the organization was named
owner and beneficiary of the policy.
This
subsection applies to all life insurance policies applied for by, or transferred
to, an organization covered by subsection (3)(e) of this section, regardless of
the time of application or transfer and regardless of whether the organization
would have been covered at the time of application or transfer.
