[§557A-407]  Insurance policies and similar
contracts.  (a)  Except as provided in subsection (b), proceeds from a life
insurance policy or other contract whose beneficiary is the trust or its
trustee, including a contract that insures the trust or its trustee against
loss for the damage or destruction of, or loss of title to, a principal asset
shall be allocated to principal.  The trustee shall allocate dividends on an
insurance policy to income if the premiums on the policy are paid from income,
and to principal if the premiums are paid from principal.  This section shall
not apply to a contract to which section 557A-409 applies.



(b)  Insurance proceeds shall be allocated to
income if they are from a policy that insures the trustee against the loss of
occupancy or other use by an income beneficiary, the loss of income, or,
subject to section 557A-403, the loss of profits from a business. [L 2000, c
191, pt of §1]