New York Laws
Article 32 - Insurance Contracts - Life, Accident and Health, Annuities
3212 - Exemption of Proceeds and Avails of Certain Insurance and Annuity Contracts.

(1) The term "proceeds and avails", in reference to policies of life
insurance, includes death benefits, accelerated payments of the death
benefit or accelerated payment of a special surrender value, cash
surrender and loan values, premiums waived, and dividends, whether used
in reduction of premiums or in whatever manner used or applied, except
where the debtor has, after issuance of the policy, elected to receive
the dividends in cash.
(2) An annuity contract includes any obligation to pay certain sums at
stated times, during life or lives, or for a specified term or terms,
issued for a valuable consideration, regardless of whether such sums are
payable to one or more persons, jointly or otherwise, but does not
include payments under a life insurance policy at stated times during
life or lives, or for a specified term or terms.
(3) The term "creditor" includes every claimant under a legal
obligation contracted or incurred after December thirty-first, nineteen
hundred thirty-nine.
(4) The term "execution" includes execution by garnishee process and
every action, proceeding or process whereby assets of a debtor may be
subjected to the claims of creditors.
(b) (1) If a policy of insurance has been or shall be effected by any
person on his own life in favor of a third person beneficiary, or made
payable otherwise to a third person, such third person shall be entitled
to the proceeds and avails of such policy as against the creditors,
personal representatives, trustees in bankruptcy and receivers in state
and federal courts of the person effecting the insurance.
(2) If a policy of insurance has been or shall be effected upon the
life of another person in favor of the person effecting the same or made
payable otherwise to such person, the latter shall be entitled to the
proceeds and avails of such policy as against the creditors, personal
representatives, trustees in bankruptcy and receivers in state and
federal courts of the person insured. If the person effecting such
insurance shall be the spouse of the insured, he or she shall be
entitled to the proceeds and avails of such policy as against his or her
own creditors, trustees in bankruptcy and receivers in state and federal
courts.
(3) If a policy of insurance has been or shall be effected by any
person on the life of another person in favor of a third person
beneficiary, or made payable otherwise to a third person, such third
person shall be entitled to the proceeds and avails of such policy as
against the creditors, personal representatives, trustees in bankruptcy
and receivers in state and federal courts of the person insured and of
the person effecting the insurance.
(4) (A) The person insured pursuant to paragraph one of this
subsection or the person effecting the insurance other than the spouse
of the insured pursuant to paragraph two hereof, and the person
effecting the insurance pursuant to paragraph three hereof, or the
executor or administrator of any such persons, or a person entitled to
the proceeds or avails of such policy in trust for such persons shall
not be deemed a third person beneficiary, assignee or payee.
(B) A policy shall be deemed payable to a third person beneficiary 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 person insured by paying the death benefits to a third
person.
(5) This section shall be applicable whether or not the right is
reserved in any such policy to change the designated beneficiary and

whether or not the policy is made payable to the person whose life is
insured if the beneficiary, assignee or payee shall predecease such
person; and no person shall be compelled to exercise any rights, powers,
options or privileges under such policy.
(6) If a policy of insurance has been or shall be effected by any
person on his own life or upon the life of another person, the
policyowner shall be entitled to any accelerated payments of the death
benefit or accelerated payment of a special surrender value permitted
under such policy as against the creditors, personal representatives,
trustees in bankruptcy and receivers in state and federal courts of the
policyowner.
(c) (1) No money or other benefits payable or allowable under any
policy of insurance against disability arising from accidental injury or
bodily infirmity or ailment of the person insured, shall be liable to
execution for the purpose of satisfying any debt or liability of the
insured, whether incurred before or after the commencement of the
disability, except as provided in subsection (e) hereof.
(2) With respect to debts or liabilities incurred for necessaries
furnished the insured after the commencement of disability, the
exemption shall not include any income payment benefits payable as a
result of any disability of the insured, and with respect to all other
debts or liabilities incurred after the commencement of disability of
the insured, the exemption of income payment benefits payable as a
result of any disability of the insured shall not at any time exceed
payment at a rate of four hundred dollars per month for the period of
such disability.
(3) When a policy provides for lump sum payment because of a
dismemberment or other specific loss of insured, such payment shall be
exempt from execution of insured's creditors.
(4) This subsection shall not affect the assignability of any benefit
otherwise assignable.
(d) (1) The benefits, rights, privileges and options which, under any
annuity contract are due or prospectively due the annuitant, who paid
the consideration for the annuity contract, shall not be subject to
execution.
(2) The annuitant shall not be compelled to exercise any such rights,
powers or options contained in the annuity contract, nor shall creditors
be allowed to interfere with or terminate the contract, except as
provided in subsection (e) hereof and except that the court may order
the annuitant to pay to a judgment creditor or apply on the judgment in
installments, a portion of such benefits that appears just and proper to
the court, with due regard for the reasonable requirements of the
judgment debtor and his family, if dependent upon him, as well as any
payments required to be made by the annuitant to other creditors under
prior court orders.
(3) The benefits, rights, privileges or options accruing under such
contract to a beneficiary or assignee shall not be transferable nor
subject to commutation. If the benefits are payable periodically or at
stated times, the same exemptions and exceptions contained herein for
the annuitant shall apply with respect to such beneficiary or assignee.
(4) The benefits, rights, privileges or options accruing under an
annuity contract funding a structured settlement which would otherwise
be nontransferable under this subsection may be transferred in
accordance with title seventeen of article five of the general
obligations law. As used in this paragraph the term "structured
settlement" means an arrangement for periodic payments of damages for
personal injuries established by settlement or judgment in resolution of

a tort claim; and the term "periodic payments" shall include scheduled
future lump sum payments.
(e) (1) Every assignment or change of beneficiary or other transfer is
valid, except in cases of transfer with actual intent to hinder, delay
or defraud creditors, as defined by article ten of the debtor and
creditor law. In such cases creditors shall have all the remedies
provided by such article ten.
(2) (A) Subject to the statute of limitations, the amount of premiums
or other consideration paid with actual intent to defraud creditors as
provided in article ten of the debtor and creditor law, together with
interest on such amount, shall enure to the benefit of creditors from
the proceeds of the policy or contract; but the insurer issuing such
policy or contract shall be discharged of liability thereunder by making
payments in accordance with its terms, or in accordance with any
assignment, change of beneficiary or other transfer, unless before any
such payment such insurer shall have received written notices, by or on
behalf of any such creditor, of a claim to recover any benefits on the
ground of a transfer or payment made with intent to defraud such
creditor.
(B) The notice shall specify the amount claimed or sufficient facts to
enable the insurer to ascertain such amount, the insurance or annuity
contract, the person insured or annuitant, and the transfers or payments
sought to be avoided on the ground of fraud.
(3) (A) Notwithstanding any inconsistent provision of this section or
other law, any right of subrogation to benefits to which a local social
services district, the department of social services, or the
commissioner of health or his designee, shall be entitled shall be valid
and enforceable to the extent benefits are available under any
individual accident and health insurance, group or blanket accident and
health insurance, or noncancellable disability insurance policy, or any
subscriber contract made by a corporation subject to the provisions of
article forty-three of this chapter, except that no such right of
subrogation shall be enforceable if such benefits may be claimed by the
department of social services, an appropriate social services official
or the commissioner of health or his designee, by agreement or other
established procedure, directly from an insurance carrier.
(B) The right of subrogation does not attach to insurance benefits
paid or provided under any health insurance policy prior to the receipt
by the carrier issuing such insurance of written notice from the
department of social services, a local social services district, or the
commissioner of health or his designee, of the exercise of subrogation
rights.
(C) No right of subrogation to insurance benefits available under any
health insurance policy shall be enforceable unless written notice of
the exercise of such subrogation right is received by the carrier within
three years from the date services for which benefits are provided under
the policy or contract are rendered. An insurer shall not deny a claim
made in conformance with paragraph (b) of subdivision two of section
three hundred sixty-seven-a of the social services law solely on the
basis of the date of submission of the claim, the type or format of the
claim form, a failure to obtain prior authorization, or a failure to
present proper documentation at the point-of-sale that is the basis of
the claim.
(4) No terms of any policy or contract which directly or indirectly
prevent or prohibit the assignment of rights under any policy or
contract prevent a local social services district, the department of
social services, or the commissioner of health or his designee, from
claiming benefits to which it shall be subrogated. The right of

subrogation attaches to any benefits paid or provided under any policy,
plan or contract upon receipt of written notice of the exercise of such
subrogation rights.
(f) This section shall likewise apply to group insurance policies or
annuity contracts, to the certificates or contracts of fraternal benefit
societies, and to the policies or contracts of cooperative life and
accident insurance companies.

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