Life Insurance Denied

Fort Worth life insurance attorneys need to know this case. The case is styled Republic-Vanguard Life Insurance Company v. Beth Walters. It is a 1987, opinion from the 1st District Court of Appeals. Here is some background.
In 1981, the deceased, James Walters, applied to Republic for mortgage protection insurance. On his application, he stated he knew of no impairment to his health. Republic requested an examination by a registered nurse. He told her of various ailments, and that he had gained 50 pounds in the previous year “due to beer drinking,” that he had been wounded in Viet Nam.
When the nurse asked about impaired sight or hearing, mental illness, cancer, growth, rupture or syphilis, James said no. James provided names of his doctors and the hospital he had been in.
Republic obtained records regarding hernia and back treatment and later issued a policy on the life of James.
In January 1982, James was killed. Beth testified that her husband had a drinking problem and mental problems.
After James death, Republic conducted an investigation that revealed James had been treated for depression. Based on these finding, Republic declared the policy void from its inception and refunded the premiums paid.
A jury found in favor of Beth and this appeal followed.
This appeals court noted that an insurer is not entitled to rely on its insured’s representations when an investigation reveals the falsity of the representations or discloses facts that would put a prudent person on further inquiry. That this rule applies when an insurer’s independent investigation reveals that an applicant’s case involves circumstances that warrant further inquiry.
Said another way: In an arm’s length transaction the defrauded party must exercise ordinary care for the protection of his own interests and is charged with knowledge of all facts which would have been discovered by a reasonably prudent person similarly situated. And a failure to exercise reasonable diligence is not excused by mere confidence in the honesty and integrity of the other party.
In this case, James admitted to a sprained and bruised back in his application. The medical examination revealed inconsistencies in that they discovered a history of hernia, excessive weight gain, and annual electrocardiograms.
These differences should have alerted Republic to investigate further.
The law in Texas is that an insurance company cannot avoid a policy on the basis of misrepresentations by the insured, when the insurance company knows of or discovers reasons to make further inquiry before issuing the policy. Thus the verdict in favor of Beth was sustained by this appeals court.
An experienced life insurance attorney is usually going to be able to help a beneficiary who is denied benefits based on misrepresentations made in an application for life insurance. It is important to consult the attorney as soon as possible.

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