The Office of General Counsel issued the following opinion on June 21, 2001 representing the position of the New York State Insurance Department.
RE: Exemption of Proceeds of Variable Annuities from Inclusion in Court Settlements.
What is the law in New York regarding the exemption of the proceeds of variable annuities from the litigation process?
N.Y. Ins. Law §3212 (d)(1) (McKinney 2001) provides that benefits, rights, privileges and options under an annuity contract that are due or prospectively due to an annuitant are not subject to execution.
The inquirer stated that in some states variable annuities are litigation proof in the sense that in the event of a lawsuit the assets held within the variable annuity and any proceeds to the owner or beneficiary are exempt from inclusion in any court settlement. The inquirer further stated that this is of interest to doctors and dentists regarding malpractice situations because it provides them with a means of sheltering a portion of their assets from the litigation process.
N.Y. Ins. Law §3212 (McKinney 2001) entitled "Exemption of proceeds and avails of certain insurance and annuity contracts" provides that the benefits, rights, privileges and options under an annuity contract that are due or will be due an annuitant are not subject to execution.
Section 3212 (d)(2) provides that the annuitant shall not be compelled to exercise any such rights, powers or options contained in the annuity contract and creditors are prohibited from interfering with or terminating the contract, subject to certain exceptions.
This Department does not express opinions on laws other than the Insurance Law. The inquirer was directed to consult legal counsel regarding N.Y. Ins. Law §3212 (McKinney 2001) and any other applicable law.
For further information, you may contact Attorney Pascale Joasil at the New York City office.