Articles Posted in Life Insurance

There are lots of difficult cases insurance lawyers will see, but here is one that is hard to too.

Mark Humphreys, P.C., announces the settlement of a life insurance case wherein the beneficiaries claim for benefits was declined due to the assertion by the insurance company that the insured intentionally lied on his application for life insurance.

The insured, at the time of applying for life insurance, had been diagnosed with diabetes. The diabetes had become so severe that he had a partial leg amputation by the time the life insurance was purchased.

Unfortunately, this is an issue that has to be addressed too often.  An article was written in April 2019, in Forbes, that addresses this issue.  The title of the article is “Insurance Issues To Consider In A Divorce.”

Most of the time and fighting and arguing in divorce situations is directed toward emotional, financial, and child custody issues.  What can be lost in the mix is, what is going to happen regarding insurance policies.  Usually the law of the state where the divorce is taking place deals with all these issues.

This Blog deals with Texas and when it comes to divorces and the issues surrounding divorces, the Texas Family Code is the source of information for how Texas Courts address these issues and also, insurance policies.

With regards to life insurance policies, what if the insurance company denies a claim for benefits based on their assertion that a misrepresentation was made in the policy application?

This is covered by the Texas Insurance Code, Sections 705.001 to 705.005 and 705.101 to 705.105.  This is also addressed by a San Antonio Court of Appeals opinion from 1969.  The style of the San Antonio case is, The Prudential Insurance Company of America v. Ignacio Torres et ux.

The facts in Torres are substantially undisputed.  Torres was an employee of Gonzaba, who had six employees.  Gonzaba was considering purchasing group life and health insurance for his employees and their families when he eventually purchased a policy through a new employee, Avalone, of Prudential.

Life insurance lawyers might know this law but most other people do not.  The law is found in the Texas Insurance Code, Sections 705.101 thru 705.105.

These Insurance Code sections require that an application for insurance be attached to the policy when the policy is sent to the applicant.

This issue was before the Texas Supreme Court in a 1994 opinion styled, Fredonia State Bank v. General American Life Insurance.

The Law Office of Mark S. Humphreys, P.C. is pleased to announce the settlement of a life insurance denial case. Mark’s client was the daughter of a lady who had applied for a small life insurance policy about a year and a half before the mother’s death. Her death was within the two year look-back period allowed to life insurers in the State of Texas. This “look-back”allows an insurance company to investigate for misrepresentations made in a life insurance policy if the insured’s death occurred within two years of the application date.
The lady had severe mental issues but also she had significant health issues that were not disclosed in the insurance application. The plus for Mark’s client is that the insurance company agent who took the application information would have been aware of the health problems of the insured because the agent was present in the house of the lady and actually would have seen the insured’s oxygen machine and medications, yet these were not disclosed in answers to relevant questions on the application for life insurance. Mark’s argument was that the agent is who made the misrepresentations, not the mother. The agent had financial incentive to make the misrepresentations because the only way the agent received commissions for the sell of the life insurance policy was if the sell was made.

An often seen reason for denying a claim for life insurance benefits is the accusation by the insurance company that the insured committed suicide.

As is pointed out in the 1982, 14th District Court of Appeals opinion, Parchman v. United Liberty Life Ins. Co., life insurance policies typically exclude suicide as an assumed risk.  However, this exclusion is virtually always limited to a suicide that takes place within two years of the inception date of the policy.

In the Parchman case, the policy excluded suicide as an assumed risk for two years from the policy date and provided a reduced benefit of the return of all premiums paid if death resulted from suicide within that period.

The Law Office of Mark S. Humphreys, P.C. was able to get a settlement in a life insurance case recently that was not a normal situation.

Texas has a law referred to as the “Slayer Statute.”  This law which is found in the Texas Insurance Code, Section 1103.151, states that if a person named as the beneficiary in a life insurance policy intentionally causes the death of the insured, then that beneficiary is excluded from recovery of the life insurance benefits.  If this happens then according to Texas Insurance Code, Section 1103.152, the life insurance benefits then go to the next person entitled to the proceeds of the policy.

Mark represented the daughter of the insured.

The law in Texas regarding who is excluded from receiving life insurance benefits when the insured has been killed is clear.  Texas Insurance Code, Section 1103.151, says that the named beneficiary forfeits their rights in the life insurance proceeds if the beneficiary is a principal or accomplice in willfully bringing about the death of the insured.

This issue is discussed in this 2019, Southern District of Texas, Houston Division opinion styled, Reliastar Life Insurance Company, P.T., a minor, and D.T., a minor v. Itani Milleni f/k/a Trang Vu.

This is an interpleader case filed by Reliastar, who insured the life of Tuyet Tran.  Reliastar needed this Court to decide whether Trang Vu, Tuyet’s husband and primary beneficiary, or P.T. and D.T., Tuyet’s children and contingent beneficiaries, are entitled to the proceeds.  This suit was instigated because Vu was suspected of murdering Tuyet, which if true, would disqualify him from receiving the insurance proceeds.  Vu was never prosecuted for the death of Tuyet, but a criminal conviction is not a prerequisite for forfeiting the insurance proceeds.

The Law Office of Mark S. Humphreys, P.C. is pleased to announce the settlement of a life insurance case wherein Mark was able to recover life insurance benefits for his client.

Mark’s client was the common-law wife of man who had a life insurance policy through his employer.  Texas recognizes these informal marriages in the Texas Family Code, Section 2.401.

Upon the death of the man, Mark’s client made a claim for the life insurance proceeds.  No one had been named as the beneficiary of the life insurance policy  This claim was denied.  The employer asserted there was no formal marriage and any life insurance proceeds went to the estate of the employee.  This man did not have kids and his parents were deceased.  If this man were married to Mark’s client, then all the proceeds would go to Mark’s client.

For attorneys handling life insurance cases here is news:

In early November, the Law Offices of Mark S. Humphreys, settled another life insurance case. The details are confidential as part of the agreement but here is what can be discussed.

The case involved a lady who had purchased coverage on herself years ago but when she moved from one state to another, she changed banks without forwarding the information to the insurance company and thus, the automatic bank drafts ceased and she had a lapse in coverage. She corrected the lapse within three months but as part of renewal of the policy she had to re-affirm her health conditions. In doing so, the insurance company claimed that her health condition had changed for the worse and that this change was not truthfully disclosed in the renewal application. When the lady died eight months later, her daughter, the beneficiary under the policy, made a claim for benefits. The life insurance company began an investigation and discovered the health conditions that had not disclosed in the renewal application and denied the daughter the life insurance benefits.