(1) Notwithstanding any other provision of law and the provisions of the Colorado uniform prudent investor act, article 1.1 of this title, a trustee may not acquire or hold as a trust asset a life insurance policy on the life of a person unless the trustee has an insurable interest, as defined in section 15-16-501, in the person. A trustee who acquires as a trust asset a life insurance policy on the life of a person in whom the trustee has an insurable interest may continue to hold the life insurance policy without liability for loss arising from the trustee's failure to:

(a) Determine whether the policy is or remains a proper investment;

(b) Investigate the financial strength of the life insurance company;

(c) Exercise or not exercise any option, right, or privilege available under the policy, including financing the payment of premiums, unless there is sufficient cash or there are other readily marketable trust assets from which to pay premiums, regardless of whether the exercise or nonexercise of these powers results in the lapse or termination of the policy;

(d) Inquire about or investigate the health or financial condition of any insured under the policy; or

(e) Retain the policy without regard to any lack of diversification of trust assets resulting from ownership of such policy and without regard to the terms and conditions of the policy.

(2) (a) This section does not relieve a trustee of liability with respect to any life insurance policy purchased from an affiliated company, or with respect to which the trustee or any affiliated company of the trustee receives any commission, unless either:

(I) The trustee has given written notice of such intended purchase to all qualified beneficiaries of the trust as defined in section 15-1-402 (10.5), or to their legal representatives, and either receives written consent to such purchase from qualified beneficiaries or does not receive from a qualified beneficiary a response to written notice by the trustee within thirty days after the mailing of such notice to the qualified beneficiary or legal representative at his or her last known address; or

(II) The trust agreement contains a provision that permits purchases of life insurance from an affiliate.

(b) For purposes of this section, an "affiliated company" shall have the same meaning as set forth in 15 U.S.C. sec. 80a-2 (a)(2).

(3) This section applies to a trust established before, on, or after August 7, 2013, and to a life insurance policy acquired, retained, or owned by a trustee before, on, or after August 7, 2013.

(4) Notwithstanding the provisions of this section, this section does not apply to any trust that expressly provides that this section shall not apply to such trust, or to any trust that otherwise provides for a different standard of fiduciary care or obligation greater than that provided in this section; except that a trust may not permit a trustee to acquire or hold as a trust asset a life insurance policy on the life of a person in whom the trustee does not hold an insurable interest.