(a) With respect to a contract for life insurance acquired or retained for a trust on the life of a qualified person, a trustee does not have a duty to determine whether the contract was procured or effected in accordance with AS 21.42.020 unless the trust instrument provides otherwise or unless the trustee applied for or accepted ownership of a contract of life insurance and had knowledge that

(1) when the contract of life insurance was issued, the benefits were not payable to a person specified in AS 21.42.020; or

(2) the contract was purchased with resources or guarantees directly or indirectly provided by a person who, when the contract was entered into, did not have an insurable interest in the insured, and, when the contract was entered into, there was a verbal or written arrangement, agreement, or plan with a third party to transfer ownership of the policy or the policy benefits in a manner that would violate the law of this state.

(b) With respect to a contract for life insurance acquired or retained for a trust on the life of a qualified person, if this subsection applies under (c) of this section, a trustee does not have a duty to

(1) determine whether a contract of life insurance is a proper investment;

(2) investigate the financial strength of the person issuing the life insurance policy;

(3) determine whether to exercise a policy option available under the contract;

(4) diversify the contract or the assets of the trust with respect to the contract; or

(5) inquire about or investigate the health or financial condition of an insured.

(c) Unless the trust instrument provides otherwise, (b) of this section applies to a trustee if

(1) the trust instrument refers to this section and makes this section applicable to contracts for life insurance held by the trust; or

(2) the trustee notifies the qualified beneficiaries or a person who may represent and bind the qualified beneficiaries under AS 13.06.120 that the trustee is electing to have this section apply to a contract for life insurance held by the trust.

(d) The notice provided under (c)(2) of this section must include a copy or restatement of (b) of this section and shall be provided

(1) by mailing a copy of the notice by certified, registered, or ordinary first-class mail addressed to the person being notified at the post office address given in the person's demand for notice, if any, or at the person's office or place of residence, if known;

(2) by delivering a copy of the notice personally to the person being notified; or

(3) if the address or identity of the person is not known and cannot be ascertained with reasonable diligence, by publishing, at least once a week for three consecutive weeks, a copy of the notice in a newspaper having general circulation in the judicial district where one of the trustees is located.

(e) If, within 30 days after a person receives notice under (d)(1) or (2) of this section or 30 days after the last date of publication of the notice under (d)(3) of this section, a person delivers to the trustee a written objection to the application of (b) of this section, (b) of this section does not apply until the objection is withdrawn.

(f) Under (a) and (b) of this section, the trustee is not liable to the beneficiaries of the trust or to another person for a loss sustained with respect to a life insurance contract to which (a) and (b) of this section apply.

(g) Notwithstanding the other provisions of this section, unless the duties have been delegated to another person under AS 13.36.270, (a) and (b) of this section do not apply to a contract for life insurance purchased from an affiliate of a trustee or for which a trustee or an affiliate of the trustee receives a commission. In this subsection, “affiliate” means a person who controls, is controlled by, or is under common control with the trustee.

(h) A trustee who performs fiduciary or advisory services related to a policy of life insurance to which (a)(1) or (2) of this section applies may not be compensated for performing the services to which (a)(1) or (2) of this section applies.

(i) In this section, “qualified person” means a person who

(1) is an insured or a proposed insured under a policy of life insurance or the spouse of that person; and

(2) provides

(A) the actual funds used to acquire or pay the premiums for the policy; or

(B) assets the income or principal of which is used to acquire or pay the premiums for the policy.