Here is a life insurance denial case that is a bit confusing at the least. The opinion is a 2020, opinion from the Western District of Texas, San Antonio Division. It is styled, Tina M. Hale, as next of kin of Michael Hale, Deceased v. Assurity Life Insurance Company.
On May 4, 2016, Mr. Hale obtained a 20-year term life insurance policy with a face value of $250,000 (the “Policy”) issued on form “I L0760”. Mr. Hale paid a monthly premium of $141.81, based on the rate for a 42-year-old non-smoker. After Mr. Hale’s death, an investigation revealed that he had been untruthful in his answer to the tobacco question on his life insurance application, and the Policy should have been issued with a Standard Tobacco rating rather than a Standard Non-Tobacco rating. Assurity applied the premiums as if they had been paid toward a policy with a Standard Tobacco rating issued on form I L0760 and determined that the benefits payable under the policy were $99,724.74. Id. In April 2019, Plaintiff obtained an illustration from Assurity, using form “I L1702”, for a 42-year-old male, tobacco-rated, 20-year level term policy with a benefit of $250,000, indicating a monthly premium of $107.23—less than the premium Mr. Hale had paid on his non-tobacco-rated policy. Plaintiff asserts that the illustration demonstrates that she is entitled to an additional death benefit of $150,275.76 (the difference between the face value of the Policy and the settlement amount), plus a refund for premium over payments totaling $726.18, and 3% interest from the date of Mr. Hale’s death.
A lawsuit resulted wherein Plaintiff asserting cause of action for negligence, negligent misrepresentation, gross negligence, deceptive insurance practices, and violations of the Texas Deceptive Trade Practices Act (“DTPA”), DTPA tie-in statutes, Texas Insurance Code and Breach of Contract.