Dallas Fort Worth Insurance Lawyer Blog

Here is a 2007, United States Fifth Circuit Court of Appeals opinion dealing with life insurance claims and “Good Health” clauses.  The opinion is styled, Assurity Life Insurance Company v. Grogan.

The insured purchased a $1,000,000.00 whole life insurance policy from the carrier with the condition precedent for coverage that the policy did not go into effect until the “first full premium was paid during the Proposed Insured’s lifetime and continued good health.”  Shortly after purchasing the policy, the insured had a biopsy performed on a lump on his neck and was diagnosed with Hodgkin’s disease.  The insured died from complications a few months later.  The carrier brought a declaratory judgement action seeking a declaration that the life insurance policy never took effect due to the failure of a condition precedent.  The wife counter-claimed for breach of contract.  The carrier subpoenaed the insured’s medical records, which showed that the insured had ongoing medical treatment for issues related to the lump on his neck for the past several years.  The trial court held for the wife, finding that the insurance policy did take effect and that the wife was entitled to the proceeds.  The carrier appealed.

The Fifth Circuit Court of Appeals reversed, holding that the “good health” condition precedent for coverage had not been met because although the Hodgkin’s disease had not been officially diagnosed before the policy took effect, it had manifested itself earlier through the insured’s ongoing neck problems.  The court found that the “good health” condition precedent was well established in Texas law and this case presented no exception which warranted coverage.  The policy unambiguously stated that in order for it to take effect, the insured/proposed insured must make the first premium payment while in good health.

Here is a 2008, life insurance misrepresentation case.  It is from the United States 5th Circuit Court of Appeals.  It is styled, Liu v. Fidelity and Guaranty Life Insurance Company.

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.  The trial court found coverage and was affirmed on appeal.

The Fifth Circuit stated that: “Under Texas law, the responses given in a life insurance application are mere representations, rather than warranties that would be capable of making coverage void or voidable.  Short of inserting an unambiguous “good health warranty” demonstrating that the parties intended the contract to rise or fall on the literal truth of an insured’s general certification of good health.  Texas has not allowed an insurer to change that result by contracting to make truthful application answers a condition precedent to coverage.

Many life insurance cases are fights between potential beneficiaries of the life insurance policy.  That was the case in this 2023, opinion from the Southern District of Texas, Houston Division.  The opinion is styled, Tommy Marion v. Principal Life Insurance Company and Nicky B. Thompson.

Marion sued Principal Life and Thompson alleging that Thompson fraudulently removed Marion as the beneficiary on a life insurance policy taken out by now-deceased John Thompson.

The facts of the case can be ciphered by reading the case.  Thompson filed a motion to dismiss Marion’s claim.  Here we will deal with the law regarding the alleged fraud.

Who can be sued when a life insurance claim is denied is an important consideration by strategic considerations.  Here is some insight.

Chapter 541 of the Texas Insurance Code defines and prohibits unfair and deceptive insurance practices.  Specifically, look at sections 541.001 to 541.061, 541.151 to 541.162, and 541.453.

The statute allows a private cause of action by any person who has sustained actual damages caused by another’s engaging in any act or practice that is defined as an unfair method of competition or unfair or deceptive act or practice in the business of insurance, or defined as an unlawful deceptive trade practice.  This is found in Section 541.151.  The definitions of unfair and deceptive practices are found in two places: (1) Texas Insurance Code, Sections 541.051 to 541.061, and (2) Section 17.46(b) of the Business & Commerce Code, the Texas Deceptive Trade Practices — Consumer Protection Act (DTPA).  See Texas Insurance Code, Section 541.051.