Life Insurance And Slayer’s Rule

Pursuant to Texas Insurance Code, Section 1103.151 and Section 887.205, a life insurance beneficiary who willfully participates in bringing about the insured’s death, either as a principle or as an accomplice, forfeits any right to benefits.  The benefits are payable to any innocent contingent beneficiary or to the insured’s nearest relative.  This is discussed in the 1987, Texas Supreme Court opinion styled, Crawford v. Coleman.

Sandra Shoaf was stabbed to death by her husband, Cornelius Shoaf.  Sandra’s life was insured under four insurance policies, each designating Cornelius as the primary beneficiary.  The trial court disqualified Cornelius from receiving Sandra’s death benefits because the jury found that Cornelius willfully caused Sandra’s death.  The contingent beneficiaries under the policies are Sandra’s parents, Phynies and Flora Crawford (the Crawfords) and Sandra’s stepson, Cornell.  Cornell is Cornelius’s son by a prior marriage. Martha Coleman is Cornell’s mother.

After disqualifying Cornelius, the trial court awarded the proceeds of two of the four policies to the Crawfords as the contingent beneficiaries under those policies.  Those proceeds awarded to the Crawfords are not a part of this appeal.  The trial court also awarded the proceeds of the remaining two policies, Equitable Life Insurance Society of the United States and Metropolitan Life Insurance Company, to Cornell Shoaf as the contingent beneficiary.  The Crawfords dispute the award of the benefits of these two policies to Cornell.

The Equitable policy named Cornelius Shoaf as the “insured,” and Sandra as the “insured spouse” under a family plan of insurance included in the policy.  The preprinted language of the policy provides that the “beneficiary” of the insured spouse is “the insured, if living; if not living, the surviving children of the insured.”

The Metropolitan policy was obtained by Cornelius through his employment with the State of Texas.  Sandra’s life was insured under this policy at Cornelius’s option.  The preprinted beneficiary designations in this policy awarded proceeds at the insured’s death to the insured’s beneficiary, then to the insured’s spouse, then to the insured’s children, and then to the insured’s parents.

In construing the Texas Insurance Code, this court has said that insurance proceeds are distributed to the nearest relative of the insured only “if all of the beneficiaries, primary and contingent, are disqualified from receiving such proceeds.”

The Crawfords argue that the proceeds of the Equitable policy and the Metropolitan policy covering Sandra’s life are distributable to them because they are Sandra’s “nearest relative” upon Cornelius’s disqualification.  The Crawfords read prior case law as directing proceeds to the contingent beneficiary only when the contingent beneficiary is expressly named and is an object of the deceased insured’s obvious intent.  Cornell argues that he should receive the proceeds because he is the contingent beneficiary under these policies, and distribution to the nearest relative is not triggered until all beneficiaries are disqualified.  We agree that the Crawfords should receive the proceeds on Sandra’s life, but for reasons different than those offered by the Crawfords.

It is undisputed that Cornelius has forfeited any interest in the proceeds because he willfully brought about Sandra’s death.   Affidavits signed by the Crawfords indicate they are Sandra’s nearest relatives.

In other cases, the Court has reasoned that distributing insurance proceeds to the nearest relative only if all beneficiaries were disqualified effectuated both the obvious intent of the insured and the legislature’s objective to deny proceeds to the individual responsible for the insured’s death.  Upon review, we find our reasoning no longer persuasive.

Our holding was contrary to the plain words of the statute.  The dissent in prior case law correctly reasoned that the Texas Insurance Code contains a specific provision for payment of insurance proceeds when a beneficiary willfully causes the death of the insured.  The specific provision directs payment of proceeds to the nearest relative.  The fact that the legislature chose to withhold proceeds from the beneficiary/killer does not mean that the legislature intended that the nearest relative would succeed to the proceeds only upon the disqualification of all beneficiaries.  Moreover, Insurance Code is as much a part of the insured’s contract as if it has been incorporated in the policy.   The rights of parties to contract with respect to insurance are limited by state laws which are a part of every contract.