1. A. In this section, "settlor" means a person that executes a trust instrument. The term includes a person for which a fiduciary or agent is acting.

2. 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. 1. The insured is:

      1. a. a settlor of the trust, or
      2. 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. 2. The life insurance proceeds are primarily for the benefit of one or more trust beneficiaries that have:

      1. a. an insurable interest in the life of the insured, or

      2. 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:

         1. (1) 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

         2. (2) stepchildren of the insured.

            The following table identifies the relatives of an insured within three degrees of lineal and collateral consanguinity using the civil law method, with each row representing a generation.

            			Great-Grandparents (3)
            		Grandparents (2)
            	Parents (1)	Aunts and Uncles (3)
            INSURED	Sisters and Brothers (2)
            Children (1)	Nieces and Nephews (3)
            Grandchildren (2)
            Great-Grandchildren (3)

Laws 2025, HB 1850, c. 254, § 11, eff. November 1, 2025.