Commencement Of Life Insurance Coverage And Termination Of Coverage

Pinning down the exact date coverage begins can sometimes be a tricky proposition.  If an insured dies before a policy becomes effective, there is no coverage.  This was discussed in the 1950, Texas Supreme Court opinion, Republic National Life Insurance Company v. Hall. and the 1980, Eastland Court of Appeals opinion, Durham Life Insurance Company v. Cole, and both are worth reading to understand the issues the courts look to, for their decisions.

A policy may also contain a “good health” clause that requires that the insured be in good health at the time the policy is issued or the coverage will not take effect.  This is discussed in the 1979, Texas Supreme Court opinion styled, Washington v. Reliable Life Insurance Co. and the 1977, Amarillo Court of Appeals opinion styled, United Savings Life Insurance Company v. Coulson.  A good health clause renders the policy void if the insured was  not in good health.  In contrast, a false representation of good health provides a defense only if other elements, such as intent to deceive, are proved.

Keep in mind that just as there are disputes whether coverage took effect before the insured died, there may also be disagreements over whether coverage terminated before the insured’s death.  This is discussed in a 1985, San Antonio Court of Appeals opinion styled, Eagle Life Insurance Company v. G.I.C. Insurance Company and in the 1979, Fort Worth Court of Appeals opinion styled, Leach v. Eureka Life Insurance Co. of America.

As an example of when does coverage terminates, the 1987, Corpus Christi Court of Appeals opinion styled, Life Insurance Co of N. America v. Klinger is worth reading.  In the case, a worker’s group accidental death benefit policy terminated on the next premium date after his employment ended.  The statutory grace period for life insurance did not apply.