The previous post discusses the inability of a decedent’s creditors to reach the proceeds of life insurance under Tennessee law. But what about the proceeds from other types of insurance? Are they exempt from creditors as well?
There shall be exempt from the claims of all creditors, and from execution, attachment, or garnishment, any sum or sums of money which may hereafter become due and payable to any person, who is a resident and citizen of this state, from any insurance company or other insurer, under the terms and provisions of any contracts of accident, health, or disability insurance insuring the assured against loss by reason of accidental personal injuries, or insuring the assured against loss by reason of physical disability resulting from disease.
Although the above rule pertains to proceeds payable during the life of the debtor, the protection of this statute continues after the debtor’s death:
In the event of the death of any such person so insured as set out in subsection (a), any sum or sums of money so due and payable at the time of the death of the insured shall likewise be exempt from the claims of all creditors and from execution, attachment or garnishment, in the same manner as provided in §§ 56-7-201, 56-7-203.
Source: T.C.A. § 26-2-110
Posted by Joel D. Roettger, JD, LLM, EPLS