The Office of General Counsel issued the following opinion on August 7, 2003, representing the position of the New York State Insurance Department.
Re: Museums and N.Y. Ins. Law § 3205(b)(3) (McKinney Supp. 2003)
Does a museum formed pursuant to N.Y. Not-For-Profit Corp. Law § 201(b) (McKinney 2003) qualify for the exception provided for under N.Y. Ins. Law § 3205(b)(3) (McKinney Supp. 2003)?
The museums certificate of incorporation should be reviewed to determine the purpose or purposes for which it was organized. If one of the purposes is charitable or educational the exception provided for under N.Y. Ins. Law § 3205(b)(3) (McKinney Supp. 2003) would apply.
No facts were presented. The question is general in nature.
N.Y. Ins. Law § 3205(b)(1) (McKinney Supp. 2003) provides:
Any person of lawful age may on his own initiative procure or effect a contract of insurance upon his own person for the benefit of any person, firm, association or corporation. Nothing herein shall be deemed to prohibit the immediate transfer or assignment of a contract so procured or effectuated.
N.Y. Ins. Law § 3205(b)(2) (McKinney Supp. 2003) provides:
No person shall procure or cause to be procured, directly or by assignment or otherwise any contract of insurance upon the person of another unless the benefits under such contract are payable to the person insured or his personal representatives, or to a person having, at the time when such contract is made, an insurable interest in the person insured.
N.Y. Ins. Law § 3205(b)(3) (McKinney Supp. 2003) provides:
Notwithstanding the provisions of paragraphs one and two of this subsection, a Type B charitable, educational or religious corporation formed pursuant to paragraph (b) of section two hundred one of the not-for-profit corporation law, or its agent, may procure or cause to be procured, directly or by assignment or otherwise, a contract of life insurance upon the person of another and may designate itself or cause to have itself designated as the beneficiary of such contract.
Paragraph 3 was added to the law in 1996 to give certain charitable institutions an insurable interest in life insurance policies that are used as a form of charitable contribution. This paragraph sets forth the criteria that must be present for this insurable interest to exist. It specifies that a qualifying Type B corporation has to have been formed for charitable, educational or religious purposes. This is narrower than the purposes for which a Type B corporation may be formed. N.Y. Not-For-Profit Corp. Law § 201(b) (McKinney 2003) provides that:
(b) A corporation, of a type and for a purpose or purposes as follows, may be formed under this chapter, provided consents required under any other statute of this state have been obtained:
. . . .
Type B--A not-for-profit corporation of this type may be formed for any one or more of the following non-business purposes: charitable, educational, religious, scientific, literary, cultural or for the prevention of cruelty to children or animals. . . .
Thus, not all types of Type B corporations enjoy the N.Y. Ins. Law § 3205(b)(3) exception; rather, it only applies to those corporations formed for charitable, educational or religious purposes.
It is suggested that the museum may have been formed for charitable or educational purposes, in which case it would qualify for the exception, or it may have been formed for cultural purposes, in which case it would not. A corporation that forms pursuant to the New York Not-For-Profit Corporation Law must deliver a certificate of incorporation to the Department of State. It must set forth certain items including "(T)hat the corporation is a corporation as defined in subparagraph (a)(5) of section 102 (Definitions); the purpose or purposes for which it is formed and the type of corporation it shall be under section 201 (Purposes) . . . ." N.Y. Not-For-Profit Corp. Law § 402(a)(2) (McKinney 2003). Accordingly, the Department suggests that a copy of the museums certificate of incorporation be obtained to ascertain the purpose or purposes for which it was formed. With this information it should be possible to determine whether N.Y. Ins. Law § 3205(b)(3) (McKinney Supp. 2003) applies to the museum.
For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.