§ 19–1301.12. Insurable interest of trustee.

(a) For the purposes of this section, the term "settlor" means a person that executes a trust instrument. The term "settlor" includes a person for which a fiduciary or agent is acting.

(b) A trustee of a trust has an insurable interest in the life of an individual insured under a life insurance policy that is owned by the trustee of the trust acting in a fiduciary capacity or that designates the trust itself as the owner if, on the date the policy is issued:

(1) The insured is:

(A) A settlor of the trust; or

(B) An individual in whom a settlor of the trust has, or would have had if living at the time the policy was issued, an insurable interest; and

(2) The life insurance proceeds are primarily for the benefit of one or more trust beneficiaries that have:

(A) An insurable interest in the life of the insured; or

(B) A substantial interest engendered by love and affection in the continuation of the life of the insured and, if not already included under subparagraph (A) of this paragraph, who are:

(i) Related within the third degree or closer, as measured by the civil law system of determining degrees of relation, either by blood or law, to the insured; or

(ii) Stepchildren of the insured.