SB 47-LIFE INSURANCE/ANNUITY EXEMPTIONS  3:02:41 PM CHAIR MCGUIRE announced the consideration of SB 47. "An Act relating to exemptions for cash surrender values, accrued dividends, and loan values of life insurance and annuity contracts." 3:03:00 PM SENATOR COGHILL, sponsor of SB 47, noted the additional information in the packets. Legislative counsel Dan Wayne issued a memorandum stating that retirement benefits of public employees and members of labor unions generally are protected from garnishment. Lauri Wing-Heier with the Department of Commerce, Community and Economic Development addressed the question about the availability of life insurance and the issue on the cap. 3:03:34 PM GERMAN BAQUERO, Intern, Senator John Coghill, stated that the intent of SB 47 is to repeal the $500,000 cap on the exemption of life insurance policies and make them fully exempt. The memorandum from Mr. Wayne thoroughly explains the exemptions set out in the Alaska Exemptions Act, AS 09.38.017. The legislation was passed initially because life insurance policies were being used as a private investment tool to secure retirement benefits. It now seems prudent to treat life insurance the same as the other fully exempt retirement benefits in Title 9. Lori Wing- Heier, the Director of the Division of Insurance, advised that the bill will not provide an exemption for criminal acts but will for civil acts. SENATOR COGHILL noted that the Legal Services memorandum says that AS 09.38.015(a)(6) exempts from debt collection in Alaska "compensation or benefits paid or payable and exempt under federal law." According to the U.S. Supreme Court, garnishment of retirement benefits is generally prohibited by ERISA, the Social Security Act, the Railroad Retirement Act, the Civil Service Retirement Act, and the Veterans' Benefits Act. SB 47 makes it more equitable for the people who are making their own retirement through life insurance or an annuities. CHAIR MCGUIRE asked Senator Wielechowski if he was satisfied. SENATOR WIELECHOWSKI questioned the wisdom of a total exemption and wondered whether it was better policy to place a $5 million or $10 million cap on the exemption. SENATOR COGHILL responded that small business owners don't get the same protection that public employees receive. He opined that in many ways those are the people who are carrying the weight in society. 3:12:01 PM SENATOR WIELECHOWSKI agreed that the limit should be increased, but argued against making it possible for someone to shield all their assets from potential garnishment. SENATOR COGHILL talked about the business he grew up in and said that if it hadn't been for insurance policies, his father might have lost his retirement. He offered other examples and opined that small businesses should have the same protections as government employees. SENATOR WIELECHOWSKI restated that he agrees that the limits should be increased. However, at some point it bumps against someone's constitutional right to file a lawsuit if all assets are shielded from garnishment. He said he's trying to find a balance. 3:18:21 PM SENATOR COGHILL moved to report SB 47 from committee with individual recommendations and attached zero fiscal note. 3:18:36 PM CHAIR MCGUIRE announced that without objection SB 47 is reported from the Senate Judiciary Standing Committee.