Good Health Requirement For Life Insurance Policy

A person who buys a life insurance policy in Dallas, Texas, or in Arlington, Grand Prairie, Fort Worth or out in Weatherford in Parker County should have the same concern as everyone else when they purchase the policy. Is this policy going to pay benefits to the benficiary named in the policy? After all, that is the only reason it is being purchased.

A Federal Court case decided in 2007, gives good reason for looking over the policy and reading it well before purchasing it. The case, Assurity Life Insurance Company v. Grogan, was presented with the following policy condition: The policy coverage did not go into effect until the “first full premium was paid during the Proposed Insured’s lifetime and continued good health.”

Soon after purchashing the policy, the insured had a biopsy performed on a lump on his neck and was diagnosed with Hodgkin’s disease. He died a few months later from complications.

Assurity Life filed a lawsuit saying the policy never took effect due to a failure of a condition precedent. Assurity subpoenaed the insured’s medical records, which showed he had issues relating to the lump on his neck for several years.

The Court ruled in favor of Assurity Life. They held that the “good health” condition precedent for coverage had not been met because although the Hodgkin’s disease had not been fully diagnosed before the policy took effect, it had manifested itself earlier through the ongoing neck problems.

The Court held that the “good health” condition precedent was well established in Texas law. The policy clearly stated that in order for it to take effect, the proposed insured must make the first premium payment while in good health.

This is a case where the insurance company won. What we do not know without talking to the people involved is whether or not there were other policies that could have been purchase had only the purchaser been aware of the limitations in this policy. Another issue is whether or not there is a potential claim against the agent who sold the policy. It would also be important to know how this policy was marketed or advertised.

The facts in each case will vary, just as the wording in each insurance policy will vary. It is important to have an experienced Insurance Law Attorney review the facts and the policy in each case where the claim for benefits is denied in order to insure that the insurance company is not treating someone wrong.