SB 509 — INSURANCE DEPARTMENT: Provides relative to bank-owned life insurance. (8/1/26)

SLS 26RS-1463 REENGROSSED Regular Session ENROLLED SENATE BILL NO.

509 BY SENATOR CLOUD INSURANCEAN DEPARTMENT.ACT To amend and reenact R.S.

Provides22:901(C)(2), relative to bank-owned life insurance.insurance;

(8/1/26) AN ACT To enact R.S.

22:920, relative to bank-owned life insurance;

to provide for definitions;

22:92022:901(C)(2) is hereby enactedamended and reenacted to read as follows:

§920.§901.

ExchangeInsurable ofinterest bank-ownedrequired; life insurance A.ForpurposesofthisSection,"bank-ownedlifeinsurance"meanslife insurance purchased by a bank on the life of a bank employee for either of the following reasons:

(1)Toprovideanendorsementsplitdollardeathbenefittotheinsured'spersonal beneficiary.insurance;

(2)intentional Toacts offsetexclusion the* cost* of* anC. employee's benefit plan.

B.(1)Abank-owned"Insurable lifeinsuranceinterest" policyas insuringused aformeremployeeofin thebankmaybeexchangedforanotherbank-ownedlifeinsurancepolicyofthethis sameSection type and deathin benefitR.S. amount.

(2)22:856 Theincludes bankonly will be deemed to maintain its insurable interest inas thefollows: Page 1 of 2 Coding:

* * * (2)(a)Inthecaseofotherpersons,alawfulandsubstantialeconomicinterest in having the life, health or bodily safety of the individual insured continue, as distinguished from an interest which would arise onlyby, or would be enhanced in value by, the death, disablement or injury of the individual insured.

(b)(i) A bank shall be deemed to maintain its insurable interest in a formeremployeeforthepurposesofexchangingonebank-ownedlifeinsurance policy for another.

(b)(ii) The commissioner shall determine the method and manner in which a bank may obtain consent for the exchange.

In making such a determination, the commissioner shall consider whether the life insurance policy is funding benefits afforded to the bank's employees, applicable consent Page 1 of 2 Coding:

SLS 26RS-1463 REENGROSSED SB NO.

509 formerENROLLED employeerequirements,ifany,underexistinglaw,cybersecuritycontrols,alignmentwith forfederal purposesand ofinterstate requirements, and the exchange.continuity of coverage in connection with policy exchanges.

The* original* instrument* andPRESIDENT theOF followingTHE digest,SENATE whichSPEAKER constitutesOF noTHE partHOUSE ofOF theREPRESENTATIVES legislativeGOVERNOR instrument,OF wereTHE preparedSTATE bySenateOF LegislativeLOUISIANA Services.APPROVED:

The keyword, summary, and digest do not constitute part of the law or proof or indicia of legislative intent.

[R.S.

1:13(B) and 24:177(E)] DIGEST SB 509 Reengrossed 2026 Regular Session Cloud Presentlawallowsabankto purchasealifeinsurancepolicyonanemployeewhenthebank has a lawful and substantial economic interest in the employee's continued life, health, or bodily safety.

Proposed law retains present law.

Proposed law defines policies held by the bank on the life of its employees as bank-owned life insurance.

Proposed law provides that a bank continues to have an insurable interest in the life of a former employee for purposes of bank-owned life insurance.

Proposed law allows the exchange of a bank-owned life insurance policywith another life insurance policy of the same type and death benefit amount.

Effective August 1, 2026.

(Adds R.S.

22:920) Summary of Amendments Adopted by Senate Senate Floor Amendments to engrossed bill 1.

Remove requirement that a former employee provide written consent to the exchange.

2.

Make technical changes.