Vermont § 3706 - Exemption of proceeds—Life insurance

§ 3706. Exemption of proceeds—Life insurance

• (a) If a policy of insurance, whether heretofore or hereafter issued, is effected by any
  person on his or her own life, or on another life, in favor of a person other than
  himself or herself, or, except in cases of transfer with intent to defraud creditors,
  if a policy of life insurance is assigned or in any way made payable to any such person,
  the lawful beneficiary or assignee thereof, other than the insured or the person so
  effecting such insurance or executors or administrators of such insured or the person
  so effecting such insurance, shall be entitled to its proceeds and avails against
  the creditors and representatives of the insured and of the person effecting the same,
  whether or not the right to change the beneficiary is reserved or permitted, and whether
  or not the policy is made payable to the person whose life is insured if the beneficiary
  or assignee shall predecease such person, and such proceeds and avails shall be exempt
  from all liability for any debt of the beneficiary existing at the time the policy
  is made available for his or her use, provided that subject to the statute of limitations,
  the amount of any premiums for such insurance paid with intent to defraud creditors,
  with interest thereon, shall inure to their benefit from the proceeds of the policy;
  but the insurer issuing the policy shall be discharged of all liability thereon by
  payment of its proceeds in accordance with its terms, unless, before such payment,
  the insurer shall have received written notice at its home office, by or in behalf
  of a creditor, of a claim to recover for transfer made or premiums paid with intent
  to defraud creditors, with specification of the amount claimed along with such facts
  as will assist the insurer to identify the particular policy. (b) For the purposes of subsection (a) of this section, a policy shall also be deemed
  to be payable to a person other than the insured if and to the extent that a facility-of-payment
  clause or similar clause in the policy permits the insurer to discharge its obligation
  after the death of the individual insured by paying the death benefits to a person
  as permitted by such clause. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 1, § 6).)