Articles Posted in Life Insurance

The application for a life insurance policy has to be attached to a life insurance policy.  This is illustrated in a 1994, Texas Supreme Court case styled, Fredonia State Bank v. General Life Insurance Company.

The insured died as the result of a gunshot wound to the head.  Prior to his death, he had purchased two life insurance policies, each in the amount of $250,000.00 issued by General.  General denied the beneficiary’s claim for benefits.  Fredonia State Bank, an assignee of one of the two policies and executor of the insured’s estate, sued to collect the proceeds of the policy.

General asserted as defenses that the insured had committed suicide and that the insured had made misrepresentations regarding his medical history, which were material to the risk assumed by General.

Life insurance lawyers need to know this 2008, 5th Circuit opinion.  It is styled, Liu v. Fidelity and Guaranty Life Insurance Company.

The importance of this opinion is the court stating that warranties are not favored in life insurance policies.

Liu filled out a life insurance application which stated that he had not been diagnosed with cancer within the previous ten years.  The policy was issued two days after he was diagnosed with cancer.  The carrier denied coverage arguing that the representation in the application was a condition precedent to coverage.  The trial court found coverage which was affirmed on this appeal.

Life insurance lawyers will have potential new clients call up and say they have been served with legal papers.  These papers will state a life insurance company has death benefits they want to pay but the life insurance company is unsure who to pay the benefits to and so, they are interpleading the life insurance proceeds into the court, notifying people who have a possible interest in the benefits and letting the court and parties decide who is entitled to the proceeds.

A Western District, San Antonio Division opinion styled, Erika Sanchez v. Prudential, sheds some light on this subject.

Following the death of the insured, the OSGLI received three different SGLI Election and Certificates form the U.S. Army Reserves.  One certificate dated June4, 2011, designates the insured’s sisters, Middleton and Vial, as co-beneficiaries of the Death Benefit.  The June 2011 Certificate bears the insured’s electronic signature and indicates that it was received and/or accepted by the appropriate branch of service.  A second Certificate, dated August 6, 2011, designates Sanchez, the insured’s estranged wife, as a primary beneficiary of 75% of the Death Benefit and Middleton as the primary beneficiary of 25% of the Death Benefit.  The August 2011 Certificate also named Vial as a secondary beneficiary.  However, there is no indication that the August 2011 Certificate was submitted, received, and/or accepted by the applicable branch of service.  The final Certificate, dated September 30, 1975, designates Sanchez as the sole primary beneficiary of the Death Benefit.  The Sanchez Certificate bears what purports to be the Insured’s signature; however the Insured’s date of birth is listed as the date he signed the Sanchez Certificate.  Richard Teniente, the Insured’s Army Reserve Unit Administrator, is listed as the personnel clerk who allegedly completed the Sanchez Certificate.  However, Mr. Teniente states in a letter that he is unable to validate the Sanchez Certificate because it appears to have been altered.

Life insurance lawyers will try to avoid what happened in an opinion from the Southern District of Texas in 2016.  The opinion is styled, Hendrix v. Wal-Mart Stores.

Kimberly Hendrix sued Wal-Mart Stores, Inc., Associates Health and Welfare Plan, and The Prudential Insurance Company of America because they denied her claim under her late husband’s employer-sponsored life insurance.

Randy Hendrix worked for Wal-Mart until July 11, 2012, when he retired.  On August 27, he died of a heart attack.  His life was insured by a group policy that was sponsored by Wal-Mart.  Hendrix filed a claim under the policy and Prudential denied the claim.

Life insurance lawyers need to read this 5th Circuit opinion.  The case is styled, Jackson National Life Insurance Company v. Lance Dobbins, et al.

Inter-pleaders are cases where the insurance company knows they owe life insurance proceeds to someone but they are unsure who to pay because there are competing claims to the funds.  As a result the insurance company files a lawsuit asking the court to distribute the funds and as part of this process the insurance company asks that money be withheld to compensate them for the costs and attorney fees associated with filing the inter-pleader.

Generally stated, the purpose of an inter-pleader action is to protect a stakeholder from liability when faced with the threat of multiple inconsistent claims to a single fund.  It does this by allowing the stakeholder to tender the contested funds to the court in lieu of defending against multiple possible lawsuits.  An inter-pleader action allows the stakeholder to pay the money in dispute into court, withdraw from the proceedings, and leave the claimants to litigate between themselves their entitlement to the funds.

Life insurance lawyers will at some point have a situation involving a life insurance policy and a life settlement. Understanding these life settlements is important. WealthManagement.com published an article that is educational. The article is titled “Survey Shows Life Settlements Remain Misunderstood.”

The life settlement industry has an exceptional opportunity to re-cast how it is perceived by the financial planning community. It should begin soon and stress eduction and opportunity.

Executives know that a key to growing any business is understanding the market and customers. The life settlement industry is no different, and for years it has relied on the financial services industry to help promote our message and value proposition. Recently, it was learned that despite more than 20 years in existence and countless educational efforts, life settlements remain misunderstood among many financial advisors – and there is the research to prove it.

Life insurance lawyers in Dallas and Fort Worth might have a situation where someone sells their life insurance policy to a third party. This situation is discussed in a National Law Review article titled, Life Settlement Disclosure Legislation.

What are an insurer’s duties to insureds about disclosing the possibility of a life settlement? At least three recent cases have addressed an insurer’s duty to inform insureds about the existence and availability of life settlements. Moreover, a handful of states have already enacted legislation requiring insurers to inform insureds about the possibility of a life settlement.

With respect to legislation, a handful of states have enacted various versions of the NCOIL Life Insurance Consumer Disclosure Model Law (the “NCOIL Model Law”), requiring insurers to inform policy owners of alternatives to the lapse or surrender of a policy. While the disclosure statutes are similar in requiring notification of alternatives to the lapse or surrender of policies, the legislative framework is not uniform. This presents a potential legal minefield for insurers. Some states require disclosure and others do not, but even within those states that require disclosure, the triggers for disclosure and disclosure requirements themselves differ.

Weatherford life insurance lawyers, this writer included, have represented clients trying to recover proceeds from a life insurance policy purchased by third parties. The answer is yes. WealthManagement.com purchased an article discussing this issue. It is titled, Facilitating Life Settlements.

As growing numbers of aging baby boomers turn to their advisors to help them achieve their retirement and estate planning objectives, many estate attorneys are faced with decisions regarding life insurance policies purchased that are no longer relevant. Life settlements have steadily gained greater recognition as a vital financial planning tool. Yet, some estate attorneys may be hesitant to recommend them until they gain deeper insight into the “inner workings” of what they view as a nascent industry with a still-maturing regulatory environment.

Based on our experience, estate attorneys have three priorities relating to life settlements.