Dallas Fort Worth Insurance Lawyer Blog

Fort Worth Insurance Attorneys need to know an important statute in the Texas Insurance Code.
That statute is Section 705.105.
The 1969, San Antonio Court of Appeals case, Prudential Insurance Company of America v. Torres, does a good job of explaining the statute. Here are some relevant parts of that case:
Prior to January 5, 1967, Torres was an employee of Gonzaba Lumber Company, which was owned by Luis Gonzaba, brother of Mrs. Bertha Torres. For some time, Luis Gonzaba and some of his six employees had considered securing a group insurance policy to provide hospitalization and medical benefits. Mr. Gonzaba had discussed such a policy with several people, including Herbert A. Avalone, whose wife was a distant cousin of Gonzaba and Mrs. Torres. Avalone had worked about two months as an agent for Penn Mutual Insurance Company under Jerry Jost, who was then the general agent in San Antonio. Avalone had no prior experience in the life or health insurance business and held only a 90-day temporary license. Avalone advised Jost of Gonzaba's interest in a group policy. Penn Mutual did not write group insurance for groups of less than ten employees; however, Jost was also a licensed agent of Prudential and authorized to broker policies with it. At the request of Jost, Prudential's employees prepared a proposal to insure Gonzaba and his employees, which proposal was discussed with Gonzaba by Jost and Avalone and accepted. Avalone secured the necessary application forms from Prudential's San Antonio office, together with some general instructions from the clerks in this office.
Each Gonzaba employee was required to submit an application for insurance and Avalone contacted Torres for the purpose of completing his application form while the latter was busy loading lumber. Torres had a limited education and read very little English, and therefore requested that he be permitted to take the form home and let his wife examine it. Avalone advised him that such was not necessary and that as soon as Torres signed the application form all employees would be covered. The application signed by Torres contains three false answers which are urged by Prudential as the basis for rescission and cancellation of the policy. The form is checked to indicate that neither Torres nor Mrs. Torres had previous trouble with diabetes, and that neither had been hospitalized or had consulted a physician during the past five years. Actually, Mrs. Torres suffered from diabetes for which she not only had consulted a physician but for which she had been twice hospitalized within the past five years. Avalone marked these erroneous answers in the application, and it is not established whether he did so before or after Torres signed same. Avalone admits that he deliberately did not ask Torres about the physical condition of Mrs. Torres because Avalone did not think that such information was required for this type policy. Actually, it would not have been required if there were more than ten employees involved. Also, there is a false certificate on the back of the policy whereby Jost certified that he had personally seen the insured on the day the application was completed and that each of the questions had been separately asked and correctly answered to the best of his knowledge. Jost testified that he signed this false certificate because Avalone had only a temporary license.
The applications were submitted along with the initial premium, and the policies subsequently issued to Gonzaba and each of his employees. Torres' policy was kept in the safe of the lumber company until after the claim arose. An underwriter for Prudential testified that the questions falsely answered were material to this type risk and that the policy would not have been issued if such application had reflected Mrs. Torres' correct medical history. On February 25, 1967, Mrs. Torres consulted a doctor relative to a severe abdominal pain which subsequently led to her hospitalization for a hysterectomy operation. On August 15, 1967, the son was hospitalized for a tonsilectomy.
Here the record does not show when Prudential discovered the false answers in the application of January 5, 1967. It was not until September 5, 1967, that Prudential wrote Torres a letter and advised that unless they agreed to exclude Mrs. Torres as an additional medical insured, the policy would be rescinded. Torres did not respond to such offer, and this suit was subsequently filed. No explanation is given for the delay in not paying or denying the claim of Mrs. Torres which had accrued in March, 1967. The September 5th letter infers that an investigation was begun shortly after the claim accrued and it is reasonable to assume that Mrs. Torres' health history was learned shortly thereafter, in that the information was easily available. This court could not say from this record that Prudential established as a matter of law that the letter of denial was written within ninety days after it learned of such false answers.
The basic question presented is whether the insurer or the insured as to be charged with responsibility for the ignorance, negligence, or mistake of the agent Avalone, who was responsible for the false answers. The trial court did not err in refusing to submit Prudential's requested issues in that the evidence was undisputed as to how the false answers were made. Thus, the trial court finding in favor or Torres was upheld.

Dallas life insurance attorneys need to know about the incontestability clause in life insurance contracts.
What most people don't know is that life insurance policies must contain an incontestability clause. This is a paragraph that says the policy will be incontestable after it has been in force during the lifetime of the insured for two years from its date, except for nonpayment of premiums. This is found in a few places in the Texas Insurance Code. Sections 1131.104, and 705.101 through 705.105. The effect of these clauses is to limit the various defenses that insurance companies will write into their policies so that they apply only during the first and second years of the policy. Insurance is a risk and without these laws regulating the policies, the insurance companies would write the policies in such a manner as to take out all the risk for them and leave their customer with only the illusion of insurance coverage.
The purpose of the incontestability clause in protecting the insured is further discussed in the 1972, Texas Supreme Court case, Minnesota Mutual Life Insurance Company v. Morse.
The statutes cited above do not specify whether the policy date or the effective date is considered its date. This creates an ambiguity that may be construed against the insurance company. And an insurance company may not place a more onerous incontestability clause in the policy than the one prescribed by statute. This means it cannot make an incontestability period of five years, or three years, or even two years and a day. It is limited to two years. But the insurance company can provide for a shorter period of incontestability.
An example can be found in the 1982, Houston Court of Appeals [14th Dist.] case, Parchman v. United Liberty Life Insurance Company. In this case, the policy date in question was October 10, 1977, and the effective date was either July 20, 1977, or August 6, 1977, depending on whether a medical examination was required and completed. Using the policy date of October 10 as the date that the clause began to run provided for a longer period than using the effective dates of July 20 or August 6. Thus, the policies incontestability clause was more onerous than the one prescribed by statute, so the statute prevailed, and the policy date in the incontestability clause was construed to mean the effective date. In this case, the two year period began running on the earlier effective date rather than on the later policy date.
This case would serve as yet another example for why a person should never accept the insurance company's claimed reason for denying a claim. An experienced Insurance Law Attorney has to be consulted to make sure that what the insurance company is doing is fair and legal.

Dallas life insurance attorneys need to read and know this 1986, Amarillo Court of Appeals case. It is styled, Southern Farm Bureau Life Insurance Co v. Dettle. Here is some relevant information:
Southern Farm is appealing from a trial court finding in favor or Dettle. The controversy arose from the Southern Farm's failure to pay death benefits on a policy insuring the life of Douglas Dee Dettle. The deceased-insured was found dead in his apartment. He died as the result of a single shotgun wound to his lower abdomen and genital area. Southern Farm defended on a suicide exclusion in the policy. In response to special issues, the jury determined that the deceased's death was not a suicide.
Southern Farm argued "the trial court's definition of the term 'suicide' erroneously included the element of intent, thereby placing upon Southern Farm a greater burden of proof than that required under either its contractual language or Texas law."
In pertinent part, the policy in question provides:
Suicide. If the Insured within two years from the date of issue of this policy shall die by his own hand or act whether sane or insane, the liability of the Company shall be limited to an amount equal to the premiums actually paid, without interest.
In submitting the case to the jury, the trial court inquired:
Do you find from a preponderance of the evidence that the death of the decedent, Douglas D. Dettle, was a suicide?
In conjunction with that issue, the trial court gave the following definition:
"Suicide" means the intentional taking of one's own life, by his own hand or act, whether sane or insane.
In its objections to the court's charge, Southern Farm stated: "First, the instruction [i.e., definition of suicide] as stated with the word "intentional" in it, misstates the definition of suicide in the insurance policy upon which suit is brought, and as such placed a greater burden on the defendant than should be required under that insurance policy." Thus, if the word "intentional" is omitted from the definition as Southern Farm asserts, the definition would read: " 'Suicide' means the taking of one's own life, by his own hand or act, whether sane or insane." In that regard, they cite to no Texas case where its asserted definition or a similar definition has been approved or suggested by the court, nor did this court find such a case.
Southern Farm, in essence, contends that the court should give a literal interpretation to the language of the policy (i.e., "shall die at his own hand or act whether sane or insane"). In that regard, the court pointed out that an overwhelming majority of the American courts have refused to give a literal interpretation of the policy language in question and other similar language.
Although the word "suicide" connotes an intention to kill oneself, and the various phrases frequently employed in place thereof--"die by his own hand or act," "self-destruction," and the like--do not literally import such an intention, yet the courts frequently declare that these substituted phrases are equivalent to "suicide," and very few of the cases base any distinction upon their use in place of that word. Indeed, it is apparent that these phrases cannot be given their full, literal significance consistently with the intention not to relieve the insurer in case of pure accident.
In this instance, as in most cases where the defense is suicide, the primary issue is whether the death is a suicide, accident, or an accident or homicide at the hand of an unknown third party. Consequently, if the policy language is given a literal interpretation and the court charges in the policy language, the insurer can avoid liability even in those instances of pure accidents (i.e., a pure accidental death at one's own hand is excluded by a literal interpretation of the policy language).
Here, the court essentially found in favor of coverage and ruled against Southern Farm. Any time an insurance company denies coverage based on a suicide exclusion in the policy, see an experienced .

Arlington insurance law attorneys would find this case to be a good case to show clients when trying to explain why the client needs an attorney.
The style of the case is, Amy Warmbrod v. USAA County Mutual Insurance Company. This is an El Paso Court of Appeals opinion issued in April 2012.
Amy Warmbrod filed suit against USAA alleging various causes of action and seeking damages arising out of USAA's handling of her underinsured motorist (UIM) claim. Warmbrod appeals the summary judgment granted in favor of USAA.
Warmbrod sustained severe injuries in a car accident on July 28, 2006.
She was treated free of charge at United States Army hospitals by virtue of her husband's military status. Warmbrod's injuries and damages were in excess of both the tortfeasor's insurance coverage and the UIM provisions of her own USAA auto policy. Warmbrod demanded that USAA pay her the $100,000 UIM benefits under her policy. The United States Army submitted a reimbursement claim to USAA for the medical care it rendered to Warmbrod in the amount of $26,404.96 pursuant to 10 U. S. C. § 1095 and the Federal Medical Care Recovery Act, 42 U.S.C. §§ 2651-53. After receiving two payments totaling $3,403.53, the Army sought to recover from USAA the remaining balance of $23,101.43, claiming that it had a right to all available insurance coverage including Warmbrod's UIM benefits which were payable to Warmbrod under her USAA policy. USAA paid Warmbrod $76,898.57 of the $100,000 UIM benefits and issued a second check for the remaining $23,101.43 payable to Warmbrod, her attorney, and the Army.
Warmbrod contends that the trial court erred by granting USAA summary judgment because under the Federal Medical Care Recovery Act (FMCRA), USAA was not obligated to pay the Army's medical reimbursement claim from her UIM coverage. USAA takes the position that FMCRA is not applicable to the facts of this case and asserts that, pursuant to 10 U.S.C. § 1095 and the implementing regulations, the Army is entitled to recovery from Warmbrod's UIM coverage.
FMCRA is one of the federal statutes that gives the United States government the authority to recover medical care it provides at its own expense to covered beneficiaries. See 42 U.S.C. §§ 2651-53.
FMCRA gives the United States government an independent right to recover the reasonable value of medical care incurred under circumstances creating tort liability upon some third person. Therefore, Section 2651 governs collection from a third-party tortfeasor. However, the United States government does not have a right to first party insurance proceeds under FMCRA. Under state law, the United States government is a proper claimant against UI/UIM coverage pursuant to the insurance contract. As neither Warmbrod nor USAA were third-party tortfeasors, the Army cannot recover under FMCRA on any settlement from the UIM coverage of Warmbrod's auto policy.
As to Section 1095, the United States has a right to collect reasonable medical care costs rendered at its expense to a covered beneficiary under both Section 1095 and FMCRA. 32 C.F.R. § 220.11(b). The FMCRA does not purport to limit any other law authorizing the United State government to recover the costs of medical care rendered at its expense as set forth in 42 U.S.C. § 2651. If a medical care recovery claim is brought under the concurrent authority of the FMCRA and Section 1095, the United States' right to collect is governed by Section 1095 and the implementing regulations.
Under Section 1095, the corollary to FMCRA, the United States government has the right to collect reasonable medical expenses for the care it provided at government expense from third-party payers. Moreover, Section 1095 limits its definition of "third-party payer" to that section of the United States Code.
The plain language of 10 U.S.C. § 1095 is clear that the United States' right to reimbursement from third-party payers includes reimbursement from automobile insurers. In essence, Section 1095 authorizes the United States' claims for recovery in states with no-fault statutes and against the MedPay, UI/UIM, personal injury protection portions of the injured party's insurance as well as Medicare supplemental insurance.
This Court, in it's opinion examined each of the statutes at issue and ultimately ruled in favor of USAA.
It should be clear how, how unclear all these laws are. Compounding this is that by handling these issues in a wrong manner, the claimant may be subjected to personal liability.

Dallas life insurance lawyers need to be aware of this 1981, Eastland Court of Appeals case. The style is Pilot Life Insurance Company v. Koch. Here is some of the relevant information:
This is a declaratory judgment case. Pilot Life sought a judgment declaring that it had no duty to pay life insurance proceeds to Lawrence A. Koch because of the death of his wife. Pilot Life had issued a policy of group insurance to Koch's employer. The policy afforded life insurance coverage for employees and their eligible dependents. Eligible dependents were defined to include "your husband or wife, unless you were legally separated or divorced." Pilot Life alleged that Mr. and Mrs. Koch were legally separated on the date of her death. A jury found that Mr. and Mrs. Koch were separated at the time of her death. Although that separation was pursuant to a "temporary" court order entered in the pending divorce proceedings between Mr. and Mrs. Koch, the trial court entered judgment for Koch notwithstanding the verdict on the theory that under Texas law there is no status of legal separation of a husband and wife before the marriage is dissolved by a decree of divorce.
On appeal Pilot Life contended that the trial court erred because the evidence established that Mr. and Mrs. Koch were separated pursuant to an order of a district court and thus they were legally separated on the date of Mrs. Koch's death; and, were, therefore, legally separated within the contemplation of the policy. Pilot Life also urged that the trial court erred in ruling, as a matter of law, that Mr. and Mrs. Koch were not legally separated on the date of Mrs. Koch's death.
Mr. and Mrs. Koch separated and began living apart on December 23, 1977. On March 23, 1978, Mrs. Koch filed suit for divorce. Temporary orders were entered on March 24, 1978. The orders set aside a residence to Mrs. Koch, divided the household goods and furnishings, set aside certain vehicles for the parties and provided for the discharge of debts.
Mrs. Koch died September 16, 1978. It was much in dispute whether there was a reconciliation between the parties prior to her death. The evidence did show that the parties lived in separate residences until Mrs. Koch died.
The issue is whether the parties were legally separated at the time of Mrs. Koch's death. The term "legally separated" as used in the insurance policy is not specifically defined in the policy, nor was there found any Texas cases defining the term. Therefore, this court had to ascertain the meaning of the term, and in doing so resort to the usual rules of construction.
First, although contracts of insurance are said to be construed strictly in favor of the insured, nevertheless they are to be construed generally as other contracts, in that unambiguous words and phrases are to be taken in their ordinary meaning unless there is something in the contract that would indicate a contrary intention.
With no definition in the policy, the court had to first determine whether the term has a readily ascertainable meaning in the plain, ordinary and popular sense of the words themselves.
An interpretation that gives a reasonable meaning to all provisions is preferable to one that leaves a portion of the policy useless, inexplicable, or creates surplusage.
Since the policy in issue was not specifically drafted for Texas but was intended for use in every state that Pilot Life is authorized to do business, the words "legally separated" should not be considered only on the basis of Texas law which does not recognize legal separation. The meaning of the words have been examined by both state and federal courts in cases in which the decision turns on whether a party is legally separated for insurance and tax purposes. All such cases found are concerned with final judgments and decrees. Not a single case was found where a court has held that a temporary order, as distinguished from a final judgment or decree, is a legal separation.
It is a settled rule that policies of insurance will be interpreted and construed liberally in favor of the insured and strictly against the insurer, and especially so when dealing with exceptions and words of limitation. When the language of a policy is susceptible of more than one reasonable construction, the courts will apply the construction which favors the insured and permits recovery.
This court held that a reasonable construction of the policy language, "unless you were legally separated or divorced," means finality of judgment. Thus, the trial court ruled correctly.
Texas Family Code, Section 9.301, states that a pre-divorce designation of a spouse is invalidated upon divorce. As such, if an insurance company pays the pre-divorce spouse, it will still be liable to any alternate beneficiary or to the insured's estate.

Arlington life insurance attorneys need to have this 1967, Texas Supreme Court case, at hand in case the need for it arises. The style of the case is, McFarland v. Franklin Life Insurance Company. Here is the relevant information.
In 1950, Franklin Life issued a policy of insurance on the life of John V. McFarland, who was about nine years of age at the time. The policy was taken out by his parents, Bernard and Gwendolyn McFarland. Bernard was named in the policy as primary beneficiary, and Gwendolyn was designated as contingent beneficiary. John married in 1962 and died the following year. His father predeceased him; he was survived by his widow and Gwendolyn. McFarland brought this suit against Franklin Life to recover the amount due on the policy plus the statutory penalty and attorney's fees. Franklin Life interpleaded Mrs. John V. McFarland, admitted liability for the proceeds of the policy, and paid the funds into court. The trial court, sitting without a jury, awarded McFarland the money so deposited but allowed no penalty or attorney's fee, and the Court of Civil Appeals affirmed. The only question brought forward on appeal was whether McFarland is entitled to recover such penalty, attorney's fee and court costs.
It is generally held that 'where the insurer admits liability, but has reasonable grounds for anticipating rival claims, and in good faith declines to pay the named beneficiary, and deposits the money in court to be paid to the rightful person as determined by the court, it is not liable for more than the face amount of the policy.'
Franklin Life advances two basic propositions in support of the trial court's judgment: (1) that, in view of a letter received from Mrs. John V. McFarland's attorney and the possibility that she might be entitled to part of the policy proceeds under the community property laws of Texas, it had reasonable grounds for anticipating rival claims; and (2) that McFarland never made demand for payment. The following is a chronology of the relevant correspondence:
September 3, 1963: McFarland's attorney notified respondent of John's death.
September 6, 1963: Franklin Life sent McFarland's attorney forms for filing the claim.
October 16, 1963: Franklin Life notified McFarland's attorney that the completed claim forms had not been received.
October 29, 1963: Mrs. John V. McFarland's attorney wrote Franklin Life advising that 'we represent the wife of John Vernon McFarland, deceased, and would appreciate details concerning the amount and beneficiary, if any, of Policy No. 884834.'
October 31, 1963: Franklin Life wrote Mrs. John V. McFarland's attorney that McFarland was the beneficiary of the policy and also furnished the name and address of McFarland's attorney.
November 1, 1963: Franklin Life's attorney sent McFarland the necessary proofs of death.
November 12, 1963: Franklin Life notified Mrs. John V. McFarland's attorney that the proofs of death had been received and requested him to obtain and furnish a release from his client. A copy of this letter was sent to McFarland's attorney.
January 7, 1964: McFarland's attorney wrote Franklin Life as follows:
'Regardless of 'your practice', the contract and the law in Texas require that the proceeds of this policy be paid to the beneficiary. Unless your check for the amount due under the policy is received forthwith or, in the alternative, we receive by return mail some valid reason (other than 'your practice') for withholding payment thereof, suit will be filed to recover on this policy, as well as attorneys' fees which are authorized for this type of action.'
January 10, 1964: respondent replied as follows:
'I am sorry for the delay that has occurred under this settlement, but we have been waiting for a reply from Mr. Billy G. Alexander of Odessa who represented the wife of the Deceased. In an effort to hurry along the disposal of the claim funds, I called Mr. Alexander and determined he no longer represents the widow as she recently called him that she had no need for legal counsel since there no longer was any family problems. Mr. Alexander stated it was his understanding the widow was living in your city and indicated we should have no problem in obtaining a Release from her.
'The form is enclosed for her signature, and when received here with the policy, our check payable to Gwendolyn McFarland will be mailed promptly. The total proceeds amount to * * *.
'If there is any objection to sending the Release and policy direct to us, they may be sent to the Illinois National Bank here in Springfield, and we will exchange the check for these items. Or, if you prefer that we have one of our agents call at your office and pick up the Release and policy in exchange for the check, we shall be glad to make that arrangement.
'We agree that as beneficiary Mrs. Gwendolyn McFarland does have an interest in the policy proceeds, but the extent of her interest is certainly questionable under your Community Property Statutes when there is a surviving spouse. Claims of this kind are not infrequent in your state or in other states, where Community Property prevails, and it is seldom that we have a case where it is not determined that some part of the proceeds should go to the spouse. When the spouse is not brought into settlement, it is the opinion of our Legal Counsel that a Release of any interest she might have should be obtained for the Company's protection against additional liability. We have followed this procedure for many years and without any difficulties; in fact, this procedure was discussed with your Texas State Insurance Department in 1959 without any suggestions for change in it.
'We were at fault in not following this case more closely with Mr. Alexander, and when our check is issued to Mrs. Gwendolyn McFarland, we will include interest * * *.'
An insurance company which knows that rival claimants are actively asserting
their rights is usually held to have reasonable grounds for withholding payment; it will not be subjected to the statutory penalties if the other conditions set out above are satisfied. That is not, however, the situation here. The October 29th letter from Mrs. John V. McFarland's attorney gave no indication that she intended to claim all or any part of the policy proceeds. It was a mere inquiry--nothing more. Any misgivings about her attitude which the letter may have caused should have been dispelled when Franklin Life was advised that she had dismissed her attorney because there were no more family problems.
In the present case respondent had no information suggesting that the widow was asserting a right under the policy or that payment to the named beneficiary would subject it to a substantial risk of double liability. An investigation, which could have been made during the period of thirty days allowed by the Insurance Code, would have disclosed that the policy was taken out while the insured was unmarried and that all premiums were paid by McFarland and her husband. It thus appears that the widow did not have a valid claim, and there was nothing within respondent's knowledge to warrant the belief that she did. Franklin Life was not justified, therefore, in requiring that McFarland obtain a release from the widow, and McFarland was under no duty to explain her failure to furnish the same. The mere possibility that facts giving rise to an adverse claim could exist does not constitute reasonable grounds for refusing to pay the designated beneficiary.
As previously indicated, Franklin Life also contended that McFarland failed to demand payment as required by the Insurance Code. The letter of January 7th makes it clear that McFarland was insisting upon payment and would file suit unless respondent had some valid reason for withholding the money other than its practice of requiring a release from the widow. This constitutes a sufficient demand under the statute.
McFarland prevailed in this case and was awarded the policy proceeds, plus interest pursuant to the Texas Prompt Payment of Claims Act, and court costs and attorney fees.

Grand Prairie life insurance attorneys need to know about this 1979, Texas Supreme Court case. It is styled, A. W. Washington v. The Reliable Life Insurance Company. Here is the relevant information.
In October 1974 Reliable issued three life insurance policies pursuant to separate applications made by the insured, Ozell Washington, who named her son, A. W. Washington, as beneficiary.
The facts and circumstances surrounding the issuance of these policies are as follows.
Ozell Washington was a very sick woman during the last few months of her life. She was a patient in Parkview Hospital in Midland from September 16 to October 11, 1974. Medical records from the hospital show that she was treated for chronic gomerulo nephritis and congestive heart failure. Her feet and ankles were very swollen. She had shortness of breath, which made it difficult for her to speak. It was difficult to obtain a history from her because the effort to talk only enhanced her shortness of breath. Notations in the records categorized her as a "Class IV cardiac" patient and "very, very acutely ill." Her prognosis was "guarded and grave." A doctor continued to see her at least twice a week after she left the hospital.
Upon her discharge from the hospital, Ozell went to the home of her son, A. W. Washington, beneficiary of the policies, who lived in Midland. Sometime before October 15, Luther "Luke" Armstrong, an agent for Reliable, came by A. W. Washington's home and talked to Ozell about taking out some life insurance. She signed two applications for two $1,000 policies. Reliable issued Policy A on October 21 and Policy B on October 15, each in the amount of $1,000 and each naming A. W. Washington as the beneficiary. About this time, Ozell moved into the home of her sister, Viola Smith, who also lived in Midland. There she was visited by Fred Jones, another agent for Reliable, who took her application for a third policy. Reliable issued Policy C on October 28, again for $1,000 and again naming A. W. Washington as beneficiary.
Ozell's condition thereafter worsened and she entered Odessa Medical Center Hospital on December 16, where she remained until her death on January 20, 1975. The medical records from that hospital showed that she was still having shortness of breath, swollen feet, and heart and lung problems. The death certificate listed the causes of death as cerebral infarction; arterial occlusion acute, intracerebral; and arteriosclerosis. Reliable was duly notified of her death.
Policy A and Policy C contain identical "good health" clauses, which read as follows:
"This Policy shall become effective on the Policy Date if the Insured is then alive and in good health, but not otherwise."
The parties stipulated that Ozell Washington, the insured, was not in good health within the meaning of the terms of these two policies on their effective dates. A. W. Washington, the beneficiary, urges, however, that the "good health" clauses were waived as a matter of law in that Reliable's agents knew that Ozell was not in good health at the time the applications were procured. Waiver was an affirmative defense upon which Washington had the burden of proof.
Policy A. Agent Armstrong obtained the application for this policy at the home of A. W. Washington, with whom Ozell was living at the time. Armstrong testified that he had known Ozell for five or six years and that he did not know she was ill. On the day in question, she appeared to him to be in good health. Even A. W. Washington testified that on that day she looked "pretty good" and was "feeling Okay." This testimony fails to establish as a matter of law that Agent Armstrong knew Ozell was not in good health and that he waived the "good health" provision of the policy. The court of civil appeals therefore correctly held that recovery on this policy was barred.
Policy C. This policy presents a somewhat different situation. Agent Jones obtained the application for this policy at the home of Viola Smith, Ozell's sister. Three people were present when Ozell signed the application: Agent Jones, Ozell, and Viola Smith. Agent Jones did not testify and there is nothing in the record to indicate or explain his unavailability. Mrs. Smith testified that Ozell looked "horrible," "like a skeleton," and "durn near dead." She stated that Ozell could not sit erect, could not get out of her chair, had difficulty talking and breathing, and that "everybody" who visited commented about her swollen legs. Most importantly, Mrs. Smith testified that she warned Ozell that the insurance company would not accept her because of her poor health.
"Q Well, I understand from your testimony that you do remember your saying that this insurance won't pay because you are in bad health?
"A Sure did. That was what I said. I said that.
"Q All right. And what did the agent say to you and to Ozell when you said that?
"A He said, 'Oh, yes, they will pay, they will pay. It is good. They will pay.' And I never did believe it, and I spoke it."
On this point, Mrs. Smith was adamant and unswerving, returning to it several times during her testimony. Nevertheless, the court of civil appeals held that Mrs. Smith was "at best . . . an interested witness" and that as such her testimony did not establish waiver as a matter of law.
The court's judgment was that the cause of action on Policy A be that Washington take nothing.
This can be confusing and illustrates why an experienced life insurance attorney needs to be consulted in these cases.

Fort Worth life insurance attorneys need to understand the 1980, Texas Supreme Court case, Life Ins. Co. of the Southwest v. Overstreet. Here is some relevant background information.
In February, 1972, Overstreet submitted his application to Southwest to convert a five-year term life policy to a life insurance policy with endowment at age ninety. The earlier policy provided that it would lapse on March 15, 1972. To effect the conversion of the term policy to the policy at issue, Overstreet, on March 6, 1972, delivered his premium check to insurer. It was returned because of insufficient funds. Overstreet then wrote a second check which was also returned for insufficient funds. His third check cleared the bank on April 18, 1972.
The insurer treated March 15 as the date annual premiums were due and sent notices to Overstreet on that basis. On March 6, 1973, insurer sent a notice to Overstreet advising him that his annual premium was due on March 15. After he failed to make his payment on that date, the insurer, on April 5, sent him another notice advising that the grace period for late payment would expire April 15. Overstreet still made no payment. The insurer, on April 15, sent him a further notice advising that the premium was past due and that the policy had been terminated. The notice offered, however, to reinstate the policy if Overstreet paid the premium within ten days. On April 25, the last day of the ten-day period, Overstreet paid the premium, which was for the 1973 insurance year. That premium payment was the last that Overstreet ever made. He did not pay his 1974 premium, and he died on April 24 of that year.
The contentions of the beneficiary are that the provisions of Overstreet's application for the policy were a part of the policy and that the policy did not become effective and was not in force until it was issued and delivered upon the payment of the full first premium. Because that payment was not made until April 18, 1972, the argument is that each annual premium thereafter became due on that date. The application contained this paragraph:

3. Any insurance approved by the Company for issuance as a result of this application, unless effective prior to policy delivery in the manner specified in the receipt attached hereto, shall be considered in force only when a policy shall have been issued by the Company and said policy manually received and accepted by the Applicant and the full first premium paid thereon, in the case of life insurance, during the good health of the Proposed Insureds . . . .

The policy, however, contains other relevant provisions. The first thing that a reader sees upon reading the policy is a plastic window at the top of the first page . Words that were typed and printed at the top of the second page appear through the window.
The information thus disclosed is the name of the insured, the policy number, the name of the owner of the policy, the amount of the insurance, which was $100,000, the insurance plan, and what the policy calls the "Effective Date." Opposite the "Effective Date" are the words, "March 15, 1972."
The next relevant part of the policy is found in the third paragraph on the first page and below the window. It says that the first premium was payable on the "Effective Date," which, as the policy had already stated, was March 15, 1972. The same paragraph states that subsequent premiums would be payable in periodic installments "thereafter." The word, "thereafter," refers to the Effective Date, or March 15, 1972. This third paragraph provides:
The consideration for this Policy is the application therefor and the payment of premiums as herein provided. The first premium in the amount specified in the Insurance Schedule is payable on the Effective Date and subsequent premiums are payable in periodic instalments thereafter until premiums have been paid for the period specified in the Insurance Schedule or until the prior death of the Insured.
On the third page, there is a paragraph which requires the insured to pay his premiums annually in advance. A provision of that paragraph says that the premiums "shall fall due on the same day of the month on which the first premium is due," and that the failure to pay the premium when due or within the grace period will end the policy except as it otherwise provides. All premiums were thus due on the day on which the first premium was due. The first premium, as we have seen from the paragraph on the first page, was due on the "Effective Date"; and that date, as the policy stated at the outset, was March 15. This is the paragraph concerning premium payments:

PREMIUM PAYMENTS. Any premium hereon is payable in advance at the Home Office of the Company, or to an authorized agent of the Company, in exchange for the Company's official receipt signed by the President or Secretary and countersigned by the agent. Premiums may be paid in periodic instalments at the instalment rates specified in the Premium Schedule but premiums may be changed to a monthly basis only if the amount of the monthly premium is stated in the Premium Schedule. The payment, of an annual, semi-annual, quarter-annual or monthly premium will maintain this Policy in force for one year, six months, three months or one month, respectively. Such periods will be deemed to expire and the next premium shall fall due on the same day of the month on which the first premium is due. Failure to pay any premium when due or within the period of grace provided shall cause this Policy immediately to become void except as otherwise provided herein.

This court by several earlier decisions has adopted the rule of the majority of jurisdictions in this country. That rule is that a definite statement in the policy of the date on which annual premiums will be due is the due date. Such a statement of the due date controls even over a provision stating that a policy will not be in force until it is initially delivered and the first premium is paid during the good health of the insured. Once the policy comes in force, all of the terms of the policy become operative including its provision about the "Effective Date.
The policy before us expressly fixes the Effective Date at March 15, 1972. The policy provides that "The first premium . . . is payable on the Effective Date," that is, on March 15, 1972; that "subsequent premiums are payable in periodic instalments thereafter"; and that "The payment of an annual premium will maintain this Policy in force for one year . . . ." This one-year period, according to the policy, "will be deemed to expire and the next premium shall fall due on the same day of the month on which the first premium is due.
The premium was due and payable on the effective date. It was paid neither by that date nor within the grace period that followed.
This is a case the insurance company won.

Fort Worth life insurance lawyers need to know about these sections of the Texas Insurance Code that prohibit certain limitations in a life insurance policy.
Here's the first one to know:
Texas Insurance Code, Section 1101.053. This sections says that "A life insurance policy may not include a provision that limits the time during which an action under the policy may be commenced to a period of less than two years after the cause of action accrues."
So what does this mean? It is pretty simple on it's face but some policies will make a shorter period and if someone does not realize that the limitations is illegal may think they are too late if and when they file a claim.
A lesson to be taken from section 1101.053 is that policies will limit the time to two years legally. The problem with this is that an insurance policy is a contract. Contracts in Texas have a normal four year statute of limitations. Insurance companies will often times legally shorten this period to two years. Beware!
Texas Insurance Code, Section 1101.054. This section tells us a life insurance policy cannot purport to take effect more than six months before the original application date, if that would qualify the insured for a rate based on a younger age. This can be referred to as a retroactive issuance or effect. Most people would like for this to be the case because it would usually result in a lower premium. But it also has the insured paying for coverage for a death that certainly has not occurred, thus the insurance company is getting a "free ride" for six months.
Texas Insurance Code, Section 1101.055. This section says "A life insurance policy may provide for a settlement that will be less than the amount required ... if the death of the insured is: (1) by the insured's own hand regardless of whether the insured is sane or insane; (2) caused by following a hazardous occupation that is stated in the policy; or (3) the result of aviation activities under conditions specified in the policy and approved by the Department of Insurance."
As to the suicide provision in 1101.055, most policies exclude coverage during the first two years of a policy if death results from suicide during that time frame.
Texas Insurance Code, Sections 705.001 to 705.004. This section is really important to people who have a life insurance policy. And to lawyers who handle life insurance claims. These sections tell us that a life insurance company cannot issue a policy that contains provisions stating that untrue or false statements in an application render the policy void. Section 705.004 tells us "It is a question of fact whether a misrepresentation made in the application for the policy or in the policy itself was material to the risk or contributed to the contingency or event on which the policy became due and payable."
This is especially important to life insurance attorneys who represent claimants because it means that a Judge is not suppose to grant a motion for summary judgment filed by an insurance carrier on this point.

Dallas insurance lawyers who deal with insurance companies very often probably already know this, but for those of you who do not - here is what you need to know and consider when dealing with an insurance company.
1) An insurance company is not your friend. They may sound nice initially when talking with you but they are, from the start, working and trying to find ways to keep from paying on a claim. That is what they do. Never make the mistake of thinking otherwise. Their job is to make money by keeping from paying claims any way they can.
2) The Texas Insurance Code is one place where the laws governing insurance companies and their conduct is regulated. The Texas Department of Insurance is suppose to regulate the insurance companies. The reality is that TDI is overworked and understaffed. If you really want to be treated right by an insurance company - then you must hire an attorney.
3) The insurance companies do not want you to hire an attorney because of #1 above. They understand that private attorneys are the only people who can make them do their job. Of course they paint attorneys as greedy and terrible people and spend millions on advertising to make attorneys look bad. Did you ever wonder who paid for all that advertising?
4) Insurance companies will lie to you!!! Surprise! Surprise! They will deny your claim by citing policy language justifying their actions when the language they are citing is illegal or taken out of context. Did I say the policy language was illegal? Yes! There are many policies in force that contain improper / unenforceable language. A lawyer knows what is proper and what is not - thus the insurance companies do not want you seeing a lawyer.
5) Insurance companies do what they do everyday. They know what they are doing. Most people will only have a claim a few times in their lives. They are the ones with experience, not you. The insurance adjustors know how to negotiate and attend classes and training sessions instructing them on how to deny a claim or pay only a small percentage of what is owed. You need to have someone on your side who knows the proper way of dealing with them.
6) When you make a claim against an insurance company, you are usually dealing with an agent or adjustor. It is rare for one to be honest enough to tell you all the monies or benefits you are entitled to. Often times, especially when it is your own insurance company, there are monies / benefits you have paid premiums to have, yet they refuse to tell you about them, thus they are cheating you and saving themselves money. Folks, this is simple dishonesty on their part.
7) It's funny actually. They do not want you to consult with an attorney about any claim you have. But guess what? That is exactly what they do. They attend classes discussing the legal aspects of handling a claim and when they have questions or concerns they have staff attorneys they consult.
8) Insurance companies are suppose to pay claims promptly. In fact, there are laws saying exactly that. They are the ones with the money. You are the one who gave them that money by paying premiums. There are laws penalizing them for using their power over you by refusing to pay proper claims or by delaying in paying a proper claim. Remember, they are earning interest on the money they are improperly holding.
9) Insurance companies make it sound like they are being taken advantage of when they have to pay a claim. They spend multi-millions of dollars trying to make the public believe they are being raked over hot coals by citing the amount of money they pay in claims. Keep in mind that is what they do. People pay their insurance premiums so that when they make a claim they will be compensated. That is what insurance is about. Paying claims is what the business of insurance is all about. Compare that big number they pay in claims to the much bigger number they receive in premiums.
10) You are not the bad guy because you have a claim. You struck a deal with them. The deal was that you would pay them premiums on a regular basis. In return they would pay for covered losses so that you were not financially hammered by the loss. When you have lived up to your end of the bargain - is it too much to ask for them to live up to their end of the bargain?!

Dallas Life Insurance lawyers need to know this case.
The case is styled Wilke v. Finn et al. It is a 1931, that was approved by the Texas Court of Appeals. Here is some relevant information.
The Metropolitan Life Insurance Company, on December 31, 1923, issued to Herman Finn a policy of life insurance in the sum of $1,500, in which Fred Wilke was named the beneficiary.
Wilke was not related to Finn, the insured, either by blood or marriage; neither was he a creditor of the insured.
Finn died on February 15, 1927, having theretofore regularly paid the premiums on the policy; Wilke, the beneficiary, never paid any of such premiums or part thereof, and did not know that the policy had issued until some time during the year 1925.
H. B. Finn, Jr. (a cousin of the insured), was appointed and qualified as administrator of the latter's estate, and on June 6, 1927, brought this suit for the proceeds of the policy against the insurance company and Wilke, the named beneficiary.
The insurance company admitted liability, deposited $1,500 in the court's registry, and, on allegations of interpleader because of conflicting claims to such proceeds, prayed for its costs, including attorney's fees.
Fred Wilke claimed the proceeds of the policy as the beneficiary named therein.
The Court pointed out the relevant law by saying, "The doctrine is well settled by the weight of authority that a person not having an insurable interest in the life of another cannot take and hold by an assignment a policy upon the life of such other person, and that a creditor can only take and hold such a policy, by assignment, to an extent sufficient to secure his debt."
"The only distinction we can see in any case between the assignment of a policy taken by a person on his own life to one having no insurable interest, and the designating such person, without insurable interest, in the original transaction as the beneficiary, is that the insurer may not know of the assignment, but would necessarily be aware of the designation in the policy.
"So far as the question of public policy is concerned, we can see no substantial distinction between the two proceedings; and, if one is invalid, it seems to us the other ought to be held equally so.
"An assignment of a valid policy to one having no insurable interest in the life insured does not invalidate the policy. The assignee may collect and apply the proceeds, if he is a creditor, to the extinguishment of his own debt, and such sums as he may have disbursed for the purpose of keeping the policy alive; and the surplus may be collected for the benefit of the heirs of the person whose life was insured.
"We see no reason why the same rule may not be applied to a person designated in the policy as the beneficiary, treating him, when he has no insurable interest, as an assignee, appointee, or trustee, to receive the proceeds for whoever may be lawfully entitled to enjoy them. The insurer will then be required to pay the sum it has promised to pay, and the money cannot be appropriated by anybody not having a legitimate right to it."
"When an insurance company has issued a policy upon the life of a person, payable to one who has no insurable interest in the life insured, or when a policy has been assigned to one having no such interest, the insurance company must nevertheless pay the full amount of the policy, if otherwise liable, because it has so contracted; and it is no concern of the insurer as to who gets the proceeds, except to see that it is paid to the proper parties, under its agreement. It is simply required to perform its contract, and the law will dispose of the money according to the rights of the parties.
The company at all times admitted its liability under the policy, but did not know to whom to pay the proceeds. Wilke was the named beneficiary, and ordinarily would be entitled to collect, even though only as trustee; the administrator had served notice on the company not to pay Wilke, and both were claiming the fund.
The company was found to be clear of any wrong doing. But the named beneficiary became liable to the estate for any amount of the policy he received that was beyond any just and owing debt of the deceased.

Fort Worth insurance lawyers need to be able to advise clients when it is appropriate for them to be named beneficiaries in an insurance policies.
A 1942, Texas Court of Appeals case styled, Drane v. Jefferson Standard Life Ins. Co. et. is good for guidance. Here is some relevant information.
Although not related by blood or marriage to Ezell, Jr., nor indebted to him in any way, Miss Drane named him as beneficiary in two insurance policies totaling $10,510 and providing for double indemnity in the event of accidental death. Her executor contends that her beneficiary is not entitled to the money because he had no insurable interest in her life. If this contention is correct it would be contrary to public policy to allow Ezell, Jr., to recover.
Those held to have an insurable interest in the life of another fall into three general classes: (1) one so closely related by blood or affinity that he wants the other to continue to live, irrespective of monetary considerations one having a reasonable expectation of pecuniary benefit or advantage from the continued life of another,
Since Ezell, Jr., was in no way related to Miss Drane and was not her creditor, the court had only to decide whether he had an insurable interest under the third classification. Bluntly expressed, insurable interest, under that classification, is determined by monetary considerations, viewed from the standpoint of the beneficiary. Would he regard himself as better off from the standpoint of money, would he enjoy more substantial economic returns should the insured continue to live; or would he have more, in the form of the proceeds of the policy, should she die? Therefore it is said that if the situation is such that he might be led to conclude that he would profit by her death, the policy contract is void as to him since the public has a controlling concern that no person have an interest in the early death of another, an interest that may give rise to a temptation to destroy her life.
The record shows, without dispute, that for some fifteen years the deceased bought clothes for the beneficiary from one department store in Dallas, beginning very early in his life. "Every spring and fall" she went to that store and bought spring and fall clothing--a suit "and whatever else he needed." As he grew older, more and more clothing was thus provided for him. To illustrate, on January 26, 1937, the year of her death, the deceased bought for him an overcoat, a pair of slacks and a sweater; on January 29, an overcoat; on February 27, a shirt, a pair of hose and two collars; on March 21, a suit, a pair of slacks and two pairs of suspenders; on April 14, four ties; on July 9, three shirts; and on September 14, a tuxedo. The total cost of this clothing so bought at one store, during less than eight months, was $277.30. An employee of a drug store in Corsicana testified that from 1930 up to the time of Miss Drane's death Ezell, Jr., had the benefit of her charge account there, that they sold him what he wanted, charging the same to her account, and that he often paid the account with a check signed by her. The record further discloses, without dispute, that in 1930, he sustained an eye injury, which necessitated many visits to a specialist in Dallas over a period of two years. There was a trip every day "for months", then every other day, then about twice a week, then once a week, and finally once a month. Young Ezell's mother testified that these trips were made in Miss Drane's car, Miss Drane driving them up from Corsicana. The record further shows, without dispute, that from 1931 to 1934, his mother was afflicted with tuberculosis; that during that period she spent five months in San Angelo, seven months in San Angelo and Los Angeles, fifteen months in El Paso and four months in Los Angeles, to restore her health, a total of thirty-one months; that during these absences the boy took all his clothes and his other personal effects and lived in the home of Miss Drane as one of the family, because under that arrangement, as his mother said, "he would feel as little as possible his mother's absence." On one occasion she gave him a "set of furniture." During his three years in high school she went almost daily in her car to take him home. She frequently took him to Sunday school and church. She took him to California to see S. M. U. play in the Rose Bowl game. In the year of her death she took him on another trip to the West Coast and into Canada, which lasted six weeks. When she met her death she was on her way to see him at College Station, where he was a freshman student at A. & M., and was taking him a radio, a cap and an apple pie.
The explanation for all this interest in young Ezell lies in the fact that he was born in the Drane home and that Dorothy Drane was in the house at the time of his birth; that she was his godmother when he was christened; and that affection came so early and grew so warm that he had called her "Auntie" all his life. This devotion was reciprocal and unwavering.
In determining insurable interest, each case must generally depend for its solution upon its own particular facts. In the light of the facts of this case, it would be unreasonable to say that young Harry Ezell could have no reasonable expectation of pecuniary benefit and advantage from Miss Drane's continued life. For thirty-one months she had mothered him while his mother was in the West fighting tuberculosis. For at least fifteen of his seventeen years of life she had provided him with perhaps more clothes than the average boy has. For months she had taken him in her car from Corsicana to Dallas to have his injured eye treated. After he got old enough better to understand what he saw, she had taken him on two extended trips, which doubtless were expensive to her but educational to him. And it is tragically significant that she was killed while on her way to see him and to take him articles both pleasing and necessary. Under such circumstances, could this youth reasonably expect that her contributions to his pecuniary benefit and advantage would continue? The Court said yes. The Court reasoned that when Dorothy Drane was killed "his temporal affairs, his just hopes and well-grounded expectations of support, of patronage, and advantage in life" were impaired. It is inconceivable, under the facts of this record, that he would ever have been tempted to destroy her life in order to collect the proceeds of the two policies in suit. Consequently, the Court held that he had an insurable interest in her life.
Whenever someone is named as a beneficiary in a life insurance policy and the insurance company chooses to not pay, each case will rest on it's own facts, and thus, an experienced Insurance Law Attorney needs to be consulted.

Dallas life insurance attorneys need to understand the difference between life insurance and betting when life insurance is obtained in a business setting.
A1998, Houston (14th) Court of Appeals case gives some guidance. The style of the case is, Tamez v. Certain Underwriters at Lloyd's. Here is some relevant information.
This is an appeal from a summary judgment granted to the employer, NCS, of the deceased, Ramon Tamez. This court reversed the judgment of the trial court.
NCS had purchased an accidental death policy from Lloyd's on Tamez. After Tamez's death, NCS submitted a claim and was paid $250,000 in proceeds.
Tamiz contends a long line of Texas cases require an insurance beneficiary to possess an insurable interest in the insured's life and that NCS does not meet the test regarding who has an insurable interest.
NCS first argues that the Texas Insurance Code does not require an insurable interest. Alternatively, NCS claims it has an insurable interest in the lives of its employees.
Citing a Texas Supreme Court ruling, this court said, bluntly expressed, insurable interest, is determined by monetary considerations, viewed from the standpoint of the beneficiary. Would he regard himself as better off from the standpoint of money, would he enjoy more substantial economic returns should the insured continue to live; or would he have more, in the form of the proceeds of the policy, should she die? Therefore it is said that if the situation is such that he might be led to conclude that he would profit by her death, the policy contract is void as to him since the public has a controlling concern that no person have an interest in the early death of another, an interest that may give rise to a temptation to destroy her life.
NCS argues it does have an expectation of pecuniary benefit in that "without employees, NCS would not generate revenue and would cease to exist as a viable entity." NCS claims this is a fact of such common knowledge that a court may take judicial notice of it. While it may be true that NCS, like any other company, needs employees to generate revenue, NCS does not dispute that the basis for purchasing this insurance was to pay any benefits to the families of the deceased and to pay for costs associated with defending a lawsuit.
NCS raised an alternative argument, that NCS has an insurable interest because it sustains a substantial pecuniary loss upon the death of an employee in the form of funds paid to the families and expenses for potential liability in litigation.
The court did not accept the arguments of NCS and in its final ruling said, we conclude that NCS has no insurable interest in the life of its employees. Therefore this policy is void as to NCS.
The final result in this case was that NCS was not entitled to the life insurance proceeds.

Dallas life insurance lawyers need to know a basic rule of life insurance. This rule is the designated beneficiary must have an insurable interest in the life of the insured.
Beginning in an 1894 case, the Texas Supreme Court has said many times that it is well settled that a life insurance beneficiary must have an insurable interest in the insured's life.
The basis for this rule is twofold:
1) No one should have a financial reason inducement to take the life of another; and
2) A life insurance policy for the benefit of one without an insurable interest is a wagering contract.
So who has an insurable interest - how is that defined in Texas?
Those who have an insurable interest in the life of another fall into three general classes:
(a) one so closely related by blood or affinity that he or she wants the other to continue t live, irrespective of monetary considerations;
(b) a creditor; and
(c) one having a reasonable expectation of pecuniary benefit or advantage from the continued life of another.
Category (c) has been explained this way by the Texas Supreme Court, in the 1942 case, Drane v. Jefferson Standard Life Ins. Co. The Court said:
Bluntly expressed, insurable interest under the third classification, is determined by monetary considerations, viewed from the standpoint of the beneficiary. Would he regard himself as better off from the standpoint of money, would he enjoy more substantial economic returns should the insured continue to live; or would he have more, in the form of proceeds of the policy, should she die?
Category (b) allows a creditor to designate itself the beneficiary of a life insurance policy purchased on the life of its debtor. Sometimes this type of policy is required before a loan will be allowed. The most common forms of these creditor policies are "credit life polices" that are obtained at the same time as a car or home loan is taken out. However, a 1968, Texas Supreme Court opinion tells us that a creditor may designate itself the beneficiary of a policy purchased by it on the life of its debtor, but its insurable interest is limited to the loan balance at the insured's death; the rest of the policy proceeds belong to the insured's estate.

Dallas life insurance lawyers need to know the "slayer's rule" regarding life insurance policies.
This rule is written into law in Texas Insurance Code, Section 887.205. It says in part, "A beneficiary of a life insurance certificate forfeits the beneficiary's interest in the certificate if the beneficiary is the principle or an accomplice in willfully bringing about the death of the insured. The nearest relative of the insured is entitled to the proceeds of an insurance certificate forfeited under this section.
The Texas Supreme Court also said this in the 1987, case "Crawford v. Coleman." Here are some facts:
This is an insurance disqualification case involving the distribution of proceeds of life insurance policies. The trial court disqualified the primary beneficiary under the policy and awarded the proceeds to the contingent beneficiaries. The court of appeals affirmed.
Sandra Shoaf was stabbed to death by her husband, Cornelius Shoaf. Sandra's life was insured under four insurance policies, each designating Cornelius as the primary beneficiary.
In construing the insurance code, this court has said that insurance proceeds are distributed to the nearest relative of the insured only "if all of the beneficiaries, primary and contingent, are disqualified from receiving such proceeds.
It is undisputed that Cornelius has forfeited any interest in the proceeds because he willfully brought about Sandra's death. The interest of a beneficiary in a life insurance policy or contract heretofore or hereinafter issued shall be forfeited when the beneficiary is the principal or an accomplice in willfully bringing about the death of the insured. When such is the case, the nearest relative of the insured shall receive said insurance.
This court has said that insurance proceeds are distributed to the nearest relative of the insured only if all of the beneficiaries, primary and contingent, are disqualified from receiving such proceeds.
There are often times fights over who the proper beneficiaries are under a life insurance policy. The discussion above deals with the question of who is entitled to the proceeds when the primary beneficiary is who caused the death of the insured. A more often seen scenario is where the named beneficiary has died or where the named beneficiary is a spouse and there has been a divorce.
Anytime there is a dispute or question, an experienced life insurance attorney needs to be involved.