31A-22-412 - Assignment of life insurance rights
31A-22-412. Assignment of life insurance rights
(1) Except as provided under Subsection (3), the owner of any rights in a life insurancepolicy or annuity contract may assign any of those rights, including any right to designate abeneficiary and the rights secured under Sections 31A-22-517 through 31A-22-521 and any otherprovision of this title. An assignment, valid under general contract law, vests the assigned rightsin the assignee, subject, so far as reasonably necessary for the protection of the insurer, to anyprovisions in the insurance policy or annuity contract inserted to protect the insurer againstdouble payment or obligation.
(2) The rights of a beneficiary under a life insurance policy or annuity contract aresubordinate to those of an assignee, unless the beneficiary was designated as an irrevocablebeneficiary prior to the assignment.
(3) Assignment of insurance rights may be expressly prohibited by an annuity contractwhich provides annuities as retirement benefits related to employment contracts.
(4) When a life insurance policy or annuity is, after July 1, 1986, assigned in writing assecurity for an indebtedness, the insurer shall, in any case in which it has received written noticeof the assignment, the name and address of the assignee, and a request for cancellation notice bythe assignee, mail to the assignee a copy of any cancellation notice sent with respect to thepolicy. This notice shall be sent, postage prepaid, and addressed to the assignee's address filedwith the insured. The notice shall be mailed not less than 10 days prior to the final terminationof the policy and each time the insured has failed or refused to transmit a premium payment tothe insurer before the commencement of the policy's grace period. The insurer may charge theinsured directly or charge against the policy the reasonable cost of complying with this section,but in no event to exceed $5 for each notice. As used in this section, "final termination of thepolicy" means the date after which the policy will not be reinstated by the insurer withoutrequiring evidence of insurability or written application.
(5) In lieu of providing notices to assignees of final termination of the policy underSubsection (4), an insurer may provide an assignee with an identical copy of all notices sent tothe owner of the life insurance policy, provided these notices comply with the other requirementsof this title.
Amended by Chapter 204, 1986 General Session