KRS 304.14-300: Exemptions of proceeds, life insurance.

(1) If a policy of insurance whether heretofore or hereafter issued, is effected by any

person on his own life, or on another life, in favor of a person other than himself, or,

except in cases of transfer with intent to defraud creditors, if a policy of life

insurance is assigned or in any way made payable to any such person, the lawful

beneficiary or assignee thereof, other than the insured or the person so effecting

such insurance or executors or administrators of such insured or the person so

effecting such insurance, shall be entitled to its proceeds and avails against the

creditors and representatives of the insured and of the person effecting the same,

whether or not the right to change the beneficiary is reserved or permitted and

whether or not the policy is made payable to the person whose life is insured if the

beneficiary or assignee shall predecease such person, and such proceeds and avails

shall be exempt from all liability for any debt of the beneficiary existing at the time

the policy is made availa ble for his use: provided, that subject to the statute of

limitations, the amount of any premiums for such insurance paid with intent to

defraud creditors, with interest thereon, shall inure to their benefit from the

proceeds of the policy; but the insurer issuing the policy shall be discharged of all

liability thereon by payment of its proceeds in accordance with its terms, unless,

before such payment, the insurer shall have received written notice at its principal

office, by or in behalf of a creditor, of a claim to recover for transfer made or

premiums paid with intent to defraud creditors, with specification of the amount

claimed.

(2) For the purposes of subsection (1) of this section, a policy shall also be deemed to

be payable to a person other than th e insured if and to the extent that a facility -of-

payment clause or similar clause in the policy permits the insurer to discharge its

obligation after the death of the individual insured by paying the death benefits to a

person as permitted by such clause.