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 101, 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.