(a) If a policy issuer makes payments or takes actions in accordance with the policy and the issuer's records, the issuer is not liable because of the payments or actions unless, at the time of the payments or actions, the issuer had actual knowledge of inconsistent provisions of a community property agreement, a community property trust, a decree relating to a community property agreement or a community property trust, or an adverse claim that is brought by a spouse, former spouse, surviving spouse, or persons claiming under a deceased spouse's disposition at death and that relates to a community property agreement or a community property trust.

(b) Except as provided in (c) - (e) of this section,

(1) the ownership interest in and proceeds of a policy that insures the life of one of the spouses and that has been classified by a community property agreement or a community property trust as community property are community property without regard to the classification of property used to pay premiums on the policy;

(2) the ownership interest in and proceeds of a policy that is owned by one spouse and that has not been classified by a community property agreement or a community property trust as community property are mixed property if all or part of a premium on the policy is paid from community property after the determination date; the community property component of the ownership interest and proceeds is the part resulting from multiplying the entire ownership interest and proceeds by a fraction that consists of a numerator that is the sum of the net premiums and portions of net premiums paid from community property and a denominator that is the sum of the net premiums paid;

(3) the ownership interest in and proceeds of a policy issued during marriage that designates the spouse of the insured as the owner are the individual property of the owner without regard to the classification of property used to pay premiums on the policy;

(4) the ownership interest in and proceeds of a policy that designates a person other than either of the spouses as the owner are not affected by this chapter if a premium on the policy is not paid from community property after the determination date; if all or part of a premium on the policy is paid from community property after the determination date, the ownership interest and proceeds of the policy are in part property of the designated owner of the policy and in part community property of the spouses without regard to the classification of property used to pay premiums on the policy after the initial payment of a premium on the policy from community property; the community property component of the ownership interest and proceeds is the part resulting from multiplying the entire ownership interest and proceeds by a fraction that consists of a numerator that is the sum of the net premiums and portions of net premiums paid from community property and a denominator that is the sum of the net premiums paid;

(5) written consent by a spouse to the designation of another person as the beneficiary of the proceeds of a policy is effective to relinquish that spouse's interest in the ownership interest and proceeds of the policy without regard to the classification of property used by a spouse or another person to pay premiums on the policy; a designation of any of the following persons or trusts as the beneficiary of a policy is presumed to have been made with the consent of the other spouse:

(A) the other spouse or an ancestor or descendant of either spouse; or

(B) a trust, to the extent that its beneficiaries consist of one or more of the persons named in (A) of this paragraph;

(6) unless the spouses provide otherwise in a community property agreement or community property trust, designation of a trust as the beneficiary of the proceeds of a policy with a community property component does not reclassify the component;

(7) unless the spouses provide otherwise, if an irrevocable trust owns a life insurance policy insuring the life of one spouse and the spouse whose life is not insured by the policy is provided a beneficial interest in the trust, then, before a contribution of assets to the trust, the spouse whose life is not insured by the policy is presumed to have relinquished any community property interest that the spouse whose life is not insured by the policy may have had in the assets contributed to the trust; the presumption in this paragraph applies only to the extent that the beneficiaries of the trust consist of one or more of the following persons:

(A) the spouse whose life is not insured;

(B) an ancestor of either spouse;

(C) a descendant of either spouse;

(8) the testimony of the spouse whose life is not insured is sufficient to rebut a presumption in (5) or (7) of this subsection.

(c) This section does not affect a creditor's interest in the ownership interest or proceeds of a policy assigned or made payable to the creditor as security.

(d) The interest of a person as owner or beneficiary of a policy acquired under a decree or property settlement agreement incident to a prior marriage or parenthood is not community property notwithstanding the classification of property used to pay premiums on the policy.

(e) This section does not affect the ownership interest or proceeds of a policy unless a spouse or a trust described in (b)(7) of this section is designated as an owner in the policy or on the records of the policy issuer and community property is used to pay a premium on the policy.

(f) In this section,

(1) “owner” means a person appearing on the records of a policy issuer as the person having the ownership interest, or, if a person other than the insured does not appear on the records as a person having the interest, “owner” means the insured;

(2) “ownership interest” means the rights of an owner under a policy;

(3) “policy” means an insurance policy insuring the life of a spouse and providing for payment of death benefits at the spouse's death;

(4) “proceeds” means the death benefit from a policy and all other economic benefits from the policy, whether the economic benefits accrue or become payable as a result of the death of an insured person or upon the occurrence or nonoccurrence of another event.