03/31/2010 01:30 PM Senate JUDICIARY

          HB 101-EXEMPTIONS: LIFE INSURANCE; ANNUITIES                                                                      
                                                                                                                                
1:41:33 PM                                                                                                                    
CHAIR FRENCH announced the consideration  of HB 101 and asked for                                                               
a motion to adopt the proposed Senate committee substitute (CS).                                                                
                                                                                                                                
SENATOR WIELECHOWSKI moved  to adopt the Senate CS for  CS for HB
, labeled 26-LS0176\T, as the working document.                                                                              
                                                                                                                                
CHAIR FRENCH  objected for discussion purposes  and asked Senator                                                               
Coghill for an explanation.                                                                                                     
                                                                                                                                
SENATOR  JOHN  COGHILL,  sponsor  of  HB  101  as  Representative                                                               
Coghill, said  the proposed Senate  CS would exempt the  value of                                                               
unmatured  life insurance  and annuity  contracts from  creditors                                                               
while  still  letting  people be  accountable  for  their  credit                                                               
obligations.  He  deferred  questions  or  clarification  to  his                                                               
staff, Ms. Moss.                                                                                                                
                                                                                                                                
CHAIR FRENCH asked  Ms. Moss to give a summary  of the bill since                                                               
the  committee hadn't  heard it  since  last session  when a  few                                                               
issues cropped up.                                                                                                              
                                                                                                                                
RYNNEVIA MOSS, staff to Senator  Coghill, said the issue was that                                                               
the  $10,000 exemption  for matured  life  insurance and  annuity                                                               
contracts was removed  from [AS 09.38.025(a)] and  inserted in AS                                                               
09.38.015,  which is  property  exempt  without limitation.  This                                                               
caused legitimate  concern about  exempting the entire  amount of                                                               
an unmatured life insurance policy or annuity.                                                                                  
                                                                                                                                
The sponsor  asked an  insurance broker  to calculate  the income                                                               
from  $250,000  and  $500,000  annuities to  see  if  a  $500,000                                                               
exemption  would allow  a reasonable  retirement.  He feels  that                                                               
this is  important because  a lot of  blue collar  workers, small                                                               
businesses, and  people who  rely on  Social Security  don't have                                                               
sufficient income at retirement for a decent living, she said.                                                                  
                                                                                                                                
1:44:33 PM                                                                                                                    
MS.  MOSS explained  that  the  proposed CS  would  exempt up  to                                                               
$500,000  from   attachment  by  creditors.  According   to  some                                                               
estimates this  would provide income  of $2,600 per  month, which                                                               
is  reasonable. She  noted that  the packets  contain charts  and                                                               
calculations supporting this claim.                                                                                             
                                                                                                                                
SENATOR FRENCH  asked if  the estimated  $2,600 per  month income                                                               
relies in part on the return of principal.                                                                                      
                                                                                                                                
MS. MOSS deferred to Ms. Hulbert.                                                                                               
                                                                                                                                
LINDA  HULBERT,   Broker,  New   York  Life   Insurance  Company,                                                               
Fairbanks, AK, informed the committee  that she is the broker who                                                               
calculated the  potential income for  someone who wanted  to take                                                               
income from an annuity or the  death benefits of a life insurance                                                               
policy  of  $500,000.  That  amount  of  money  would  provide  a                                                               
lifetime income  for a couple  or the surviving spouse,  but each                                                               
individual has a  lot of options with respect to  how those funds                                                               
would be  distributed. For  example, they  could opt  to maximize                                                               
the income throughout  their life or get a  guaranteed income for                                                               
a period  of years or  get some income  and leave some  money for                                                               
their heirs. "But  $500,000 would provide about  $2,500 per month                                                               
to supplement  someone's retirement," she said.  Ms. Hulbert said                                                               
this is a reasonable amount  and she supports the proposed Senate                                                               
CS.                                                                                                                             
                                                                                                                                
SENATOR EGAN joined the committee.                                                                                              
                                                                                                                                
SENATOR FRENCH  asked Ms.  Moss if  organized labor  supports the                                                               
bill.                                                                                                                           
                                                                                                                                
MS.   MOSS   related   that    her   conversations   with   labor                                                               
representatives  have been  positive. In  fact, trade  unions are                                                               
very large  clients of  annuities and  life insurance  to enhance                                                               
retirement, she said.                                                                                                           
                                                                                                                                
SENATOR COGHILL reminded  the committee that if the  Senate CS is                                                               
adopted, a  concurrent resolution  will have  to travel  with the                                                               
bill.                                                                                                                           
                                                                                                                                
CHAIR FRENCH removed his objection  to the CS. Finding no further                                                               
objection, he  announced that version  T is before  the committee                                                               
and that the concurrent resolution would travel with the bill.                                                                  
                                                                                                                                
CHAIR FRENCH announced he would hold  SCS for CS for HB 101 until                                                               
Friday.