Life Insurance Application

Granbury life insurance lawyers need to read this 1975, Texas Supreme Court opinion.  It is styled, Johnson v. Prudential Insurance Company of America.

This is a suit to collect benefits under a group life insurance policy.  Prudential resisted payment based on their assertion that the deceased willfully deceived the company by her statements made in procuring coverage.  The beneficiary contends that the statements of the insured were inadmissible and could not be considered because copies of the application were not furnished to the insured in compliance with what is now the Texas Insurance Code, Section 705.103.

Ten years before applying for this insurance, Mrs. Johnson, the insured, had her right breast removed because of cancer.  Mrs. Johnson made what she could have regarded as true statements, but they were incomplete and misleading.

The question before the Court was whether Mrs. Johnson’s statements on the application were admissible to support Prudential’s defense of misrepresentation.  Copies of these statements were not furnished to her prior to her death.  The case turns upon the effect to be given section 705.103 which reads:

DOCUMENTS TO ACCOMPANY POLICY. Except as otherwise provided by this code, a life insurance policy must be accompanied by a copy of:

(1) the policy application; and

(2) any questions and answers given in connection with the application.

Prudential contends that the statute does not require a copy of the instrument to be furnished to the insured before her death, that the statute only requires Prudential to furnish a copy to the insured or to his beneficiary, and that it is enough that at the time of the offer into evidence the statement is or has been furnished.

Since 1903, Texas has had a statutory provision requiring the attachment of the application to the policy and to certain insurance contracts.  Attachment of the application to the policy may be beneficial to the insurance company as well as to the insured, because the knowledge of the insured of the statements contained in the application is thereby conclusively established.

When the Texas Legislature in 1931 first enacted a statute regulating group life insurance, it required policies to contain language similar to what is found in today’s Section 705.103.

The statute was rewritten in 1947, with substantially the same result.

This statutory language has been so construed by the courts.  No case has been found which has construed similar statutory language to contrary effect.

The judgment, which was in favor of Prudential was reversed.