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HB 1013

Insurance Companies, Agents, Brokers, Policies - As introduced, clarifies that the phrase "for the benefit of" includes the beneficiary of the insurance policy or annuity contract for purposes of the exemption from claims of creditors for a policy of life insurance or under an annuity contract made for the benefit of, or assigned to, the spouse or children, or dependent relatives of, the person whose life the policy or annuity contract is based on; clarifies that use of exempt funds does not change the classification of the funds from exempt to nonexempt. - Amends TCA Title 56.

114th Regular Session (2025-2026) Introduced by Johnny Shaw

Bill clarifies that life insurance and annuity funds for family members remain creditor-protected even after beneficiaries access them.

Assigned to s/c Insurance Subcommittee
#agents #brokers #insurancecompanies #policies
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Bill Summary · HB 1013

Legislative bill overview

HB 1013 clarifies Tennessee insurance law to explicitly state that life insurance policies and annuity contracts designated for spouses, children, or dependent relatives are protected from creditor claims. The bill further clarifies that using exempt funds from these policies does not convert them into non-exempt assets subject to creditor collection.

Why is this important

This bill addresses a potential legal ambiguity that could put families at financial risk. Without clear language, creditors might argue that life insurance proceeds or annuity funds lose their protected status once accessed, potentially allowing debt collection against money intended for dependents. The clarification provides stability for estate planning and protects family financial security in cases of the policyholder's death or financial distress.

Potential points of contention

  • Scope of "dependent relatives": The bill doesn't define what qualifies as a "dependent relative," which could create disputes over who is eligible for creditor protection and lead to inconsistent application across cases.
  • Unintended creditor protection expansion: Insurance companies and creditor representatives may argue the clarification is too broad, potentially allowing individuals to shield excessive assets from legitimate debts through strategic policy designation.
  • Interaction with other exemptions: Questions may arise about how this exemption interacts with federal bankruptcy law and other state exemptions, potentially creating conflicts or loopholes in debt collection procedures.

Compiled from official sources — confirm details with the bill’s official record.

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