Life Insurance – Missed Payments

Life insurance claims that are denied for missed payments of premiums is pretty common.  This issue was discussed in a Southern District of Texas, Houston Division, opinion styled, Colonial Penn Life Insurance Company v. Ashley E. Parker, et al.

Robert Parker applied for a whole life policy with Colonial on October 30, 2014.  Ashley Parker and Aden Barron were beneficiaries of the policy.  The policy was issued on November 20, 2014.

On June 22, 2015, seven months later, Parker died in a car wreck.  A claim for benefits were made on the life insurance policy.

Colonial filed a motion for summary judgement on the issue of the policy having lapsed due to non-payment of premiums among other things.  Colonial claimed and proved that Parker had a monthly premium of $98.25.  That Parker made the premium payments for December 2014, and January and February 2015.  The March 2015, payment was late and no payments were made thereafter.  Colonial sent premium notices in April of 2015 for $98.25 and May of 2015 for $196.50 ($98.25 for May and the past due $98.25 amount for April), but neither invoice was paid nor did Parker otherwise respond to these notices.

The policy states:

You have a grace period of 31days after the due date to pay any premium after the first.  Coverage will stay in effect during the grace period; however, if death occurs any unpaid premiums will be deducted from the Death Benefit.  If any premium is not paid when due or during the grace period, this policy will terminate at the end of the grace period, subject to the Non-forfeiture Benefits Provision.  [This policy had no accrued cash value and consequently had no non-forfeiture benefits.]

The 31 day grace period ended on May 21, 2015 without any payments.  In June of 2015, Colonial sent a letter cancelling the policy as of April 20, 2015 due to the missed April and May payments.  Thus, the policy had lapsed prior to Parker’s passing.

Defendant’s offered no summary judgment evidence and very little argument to counter Colonial’s contention that there was no policy in place due to the failure to pay premiums.  That being the case, Defendant’s cannot prevail as a matter of law on any cause of action asserting either a claim for breach of the policy, a claim concerning Colonial’s handling, or any claims relating to Parker’s death.

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