Life Insurance Attorney And Intent To Deceive In The Application

Life Insurance Attorneys can discuss the present state of the law in Texas as it relates to life insurance policies that are governed by State Law.  However, as of the date of this post, there is a new case in the Texas Supreme Court which may change the law or confirm it, depending on your perspective.


In 2013, the Dallas Court of Appeals decided Medicus Insurance Co. v. Todd.  Todd follows an earlier seminal case regarding alleged misrepresentations in a life insurance application, Mayes v. Metropolitan Mutual Life Ins. Co.  In Mayes, the Texas Supreme Court held that there are five factors that must be proven before a life insurance policy can be rescinded on the basis of misrepresentations in a life insurance application: (1) the making of the representation; (2) the falsity of the representation; (3) reliance on the misrepresentation by the insurer; (4) the insured’s intent to deceive the insurer; and (5) the materiality of the misrepresentation.  In Todd, the Court found that these five factors applied regardless of whether the insurer attempted to rescind the policy for common law misrepresentations or under statutory provisions like section 705.104 of the Texas Insurance Code.  In 2020, the U.S. District Court for the Southern District of Texas added another layer to this discussion in Landeros v. Transamerica Life Ins. Co.  The Landeros Court observed that two different statutes apply to the rescission of life insurance policies – one when the policy is rescinded within two years of its issuance and the other that applies outside the two year period.  Noting that Transamerica Life Insurance Company rescinded the policy within two years of its issuance, the Court determined that section 705.051 is the applicable statute.  Although, the statutes are similar, section 705.104 (applicable in Todd) requires that the misrepresentation be made :intentionally.”  Because section 795.105 (the statute at issue in Landeros) does not contain this requirement, the Court concluded that an insurer who seeks to rescind a life insurance policy within two years from the date of issuance is not required to prove the insured’s intent to deceive.

The new case in the Texas Supreme Court is an appeal from the Amarillo Court of appeals and is now styled, American National Insurance Company v. Bertha Arce.

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