Articles Posted in Life Insurance

Life Insurance lawyers will eventually receive a phone call wherein the potential new client complains that the life insurance company quit making agreed upon payments for the life insurance from the potential client’s bank account.
Here is a 2023 opinion from the Southern District of Texas, Victoria Division, that discusses this issue.  The opinion is styled, Gloria Fric v. Allstate Life Insurance Company.
The opinion discusses several legal issues.  The focus here will be the issue related to the electronic funds transfer.

Life insurance lawyers and other attorneys dealing with insurance companies will often speak of the insurance company “duty of good faith and fair dealing.”  This issue is discussed in a 2023 opinion from the Northern District of Texas, Dallas Division.  The opinion is styled, Avery D. Ensley v. Genworth Life and Annuity Insurance Company.
The facts of the case can be read in the opinion.  It is the discussion related to the issue of the “duty of good faith and fair dealing” that is discussed here.
The Court addressed Plaintiffs bad faith claim.  Plaintiff alleges that (1) Defendant breached its duty when it failed to adequately notify Plaintiff of premium changes, the Policy’s alleged depleted cash value, and the Policy’s pending lapse; (2) Defendant breached its duty by failing to proceed with automatic withdrawals until Plaintiff was notified of the deficit and given an opportunity to make the requisite payment; and (3) Defendant breached its duty when it failed to reinstate the Policy.

Life Insurance Attorney must read this 2023 opinion from the Texas Supreme Court.  The opinion is styled, American National Insurance Company v. Bertha Arce.
This is arguably the most important life insurance opinion in many years in Texas and centers around whether or not the insurer must prove intent to deceive when denying a claim for life insurance benefits.  The language of the Court in defining this issue is thus:
The primary issue before us is whether the common-law scienter requirement is repugnant to the plain language of section 705.051 of the Texas Insurance Code, which provides that “[a] misrepresentation in an application for a life, accident, or health insurance policy does not defeat recovery under the policy unless the misrepresentation: (1) is of a material fact; and (2) affects the risks assumed.”

Life insurance lawyers will tell you that the answer to the titled question is dependent on the wording of the insurance policy and the facts of the case.

This issue was discussed in the 1979, Fort Worth Court of Appeals opinion styled, Leach v. Eureka Life Insurance Company of America.

This case involved a credit life insurance policy.  The deceased in Tommy Leach and the executrix of the estate is Mary Leach, the Plaintiff here.

The designated beneficiary of a life insurance policy generally is entitled to the proceeds upon the death of the insured.  Absent an adverse claim, the insurer may pay the benefits to the designated beneficiary.
This is discussed in the 1967, Texas Supreme Court opinion styled, McFarland v. Franklin Life Ins. Co.
In 1950 respondent 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, the latter of whom is petitioner here.  Bernard was named in the policy as primary beneficiary, and petitioner 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 petitioner.

Here is a life insurance case that went to trial in 2023.  The case is styled, Mirna Guzman v. Allstate Assurance Company.  The case was tried in the Northern District of Texas, Amarillo Division.

Allstate filed a declaratory judgment action against Guzman to have the life insurance policy she had applied for, rescinded due to misrepresentations in the policy application.

This was a lawsuit originally filed by Guzman and Allstate had countered with the declaratory judgment action.

Imagine this.  A life insurance claim is denied.  The beneficiary goes to an attorney who makes sends a demand letter to the life insurance company demanding payment and monies for their bad faith actions.  In response to the demand letter the life insurance company sends the policy proceeds, plus interest.  Does that end the matter?

This was answered as far back in Texas as 1908, in the Texas Supreme Court opinion styled, Penn Mutual Life Ins. Co. v. Manor.

For the full facts the opinion, which is kinda long, needs to be read.

Can someone who is not related by blood have a pecuniary interest in the life of another as it relates to life insurance policy?  This answer is discussed in a 1942, Texas Supreme Court opinion styled, Drane v. Jefferson Standard Life Ins. Co.

Here is what the court discussed in that case.

Although not related by blood or marriage to Harry Ezell, Jr. not indebted to him in any way, his godmother Dorothy Drane named him as beneficiary in two life insurance policies.  Upon her death, the executor of her estate, her brother, asserted that Ezell had n insurable interest.  The facts showed Miss Drane had bought clothes for the boy for fifteen years, had paid for his medical care, had cared for him while his mother was ill, had taken him on vacation, and sadly was killed in a wreck as she drove to visit him his freshman year in college, “taking him a radio, a cop and an apple pie.”  The court concluded that Ezell did have an insurable interest  based on a reasonable expectation of pecuniary benefit and advantage from Miss Drane’s continued life .  “We think 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.

Life insurance lawyers know that a beneficiary of a life insurance policy must have an “insurable interest” in the life of the insured.

Those who 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 or she wants the other to continue to live, irrespective of monetary considerations;

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