CA SB540

Amends Section 5236 of the Corporations Code to revise rules on life insurance premium payments by nonprofit public benefit corporations for directors or officers.

Allows nonprofit corporations to pay life insurance premiums if repayment is secured by either the policy's death benefit proceeds or cash surrender value, or both.

Requires contracts securing loans with death benefit collateral to include terms ensuring policy fees, withdrawals, and loans do not impair the death benefit value needed to repay the loan for the life of the policy.

Requires contracts securing loans with cash surrender value collateral to include terms ensuring the cash surrender value remains sufficient to repay the loan cost for the life of the policy.

Approved by Governor September 5, 2019.