(1) Whenever the insured in a life insurance policy owned by the insured has reserved to the insured the right to change the beneficiary under the policy, the insured has the right to and may assign the policy, to the extent and in the manner permitted by the terms of the policy, as security for a loan, or for any other purpose, without the beneficiary joining in the assignment or assenting to the assignment, and the rights and interests of the beneficiary, including a spouse or child of the insured, in the policy or its proceeds, shall be subject and subordinate to the rights and interests of the assignee as created and defined by the assignment.
(2) Nothing in this section or any other law shall be construed as prohibiting any person insured under a group insurance policy, pursuant to the terms of the policy or an arrangement among the insured, the group policyholder and the insurer, from making to any person an assignment of the rights and benefits conferred on the insured by any provision of the policy or by law, including, but not limited to, the right to have issued to the insured an individual policy arising from conversion as set forth in § 56-7-2305 or otherwise and the right to name a beneficiary.
(3) Any assignment permitted in this section, whether made before or after May 7, 1969, is valid for the purpose of vesting in the assignee all the rights and benefits assigned, and shall entitle the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured under the policy, in accordance with the terms of the assignment without prejudice to the insurer on account of any payment it may make or any individual policy it may issue arising from conversion prior to receipt at its home office of notice of the assignment.
(4) This section acknowledges, declares and codifies the existing right of assignment of interests under life insurance policies.
(5) When a policy of life insurance is assigned in writing as security for an indebtedness after May 8, 1992, upon receipt of a written request signed by the assignee, together with a copy of the assignment, the insurer shall mail to the assignee a copy of each lapse notice and late payment offer routinely mailed to the policyholder. The insurer shall mail the notice copies while the assignment remains in effect.
(6) Subdivision (b)(4)(A) does not apply to any policy where the premium is paid weekly, monthly or quarterly. Subdivision (b)(4)(A) does not apply to industrial life or group life policies. Failure of an insurer to comply with subdivision (b)(4)(A) shall not result in the incurrence of any liability by or obligation on the part of the insurer, which liability or obligation would not be present under the terms of the policy in the absence of any assignment of the policy.
(7) Nothing in this section shall be construed as requiring any notice to a policyholder not already required by contract or law.