Articles Posted in Life Insurance

Life Insurance Lawyers have many potential clients where in the basis for denial of the claim is that insured made a misrepresentation in the policy application within two years of making the application.  This two years is called the contestability period.  After two years the policy is supposed to be incontestible.  The Southern District of Texas, Houston Division, issued an opinion in September 2021, wherein one of the issues dealt with the incontestability period.  The style of the opinion is, Pruco Life Insurance Company v. Blanca Monica Villarreal and Transamerica LIfe Insurance Company v. Blanca Monica Villarreal.

In this case, the insured had purchased two very large life insurance policies from the Pruco and Transamerica.  The details of the case can be read in the opinion as can the other issues presented.  Discussed here is the issue of Incontestability.

Villarreal moved for partial summary judgment on this issue that the policies are incontestable on that basis that under Texas law, insurance policies cannot be contested after remaining in effect for two years during the insured’s life.  Villarreal argues that even if Texas law permits insurers to raise a material and intentional misrepresentation defense after the two years, that challenge would not apply here because the life insurance policies did not contain the language reserving the right to raise the challenge.  Additionally, Villarreal argues that the defense would apply only if the insured (Rosendi) was residing in Texas “during the term of his life insurance policies.”  The insurers oppose on the basis that an exception to incontestability exists when an insurer can prove material and intentional misrepresentations and that the exception applies to Rosendi’s life insurance policies because he was “in” Texas when he contracted for the policies
and when the policies were delivered to him.

Here is a life insurance case wherein the insurance company attempts to have the Court agree to rescission of the policy.  It is a 2021, opinion from the Southern District of Texas, Houston Division.  The opinion is styled, Pruco Insurance Company v. Blanca Monica Villarreal – Transamerica Life Insurance Company v. Blanca Monica Villarreal.

This opinion regards both sides filing motion for summary judgement.  The case involves millions of dollars of life insurance.  The facts of the case are long and detailed and the opinion should be read to understand the facts.  The case also deals with many issues.  The issue discussed here has to do with rescission.

The insurer claim there are undisputed facts that show material, intentional misrepresentations made in the application for insurance, warranting rescission as a matter of law.  A material fact is one that might affect the outcome of the suit
under governing law,” and “a fact issue is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party.

Life Insurance Claim Denials are getting more and more common.  But, the insurance companies are beginning to jump ahead of the denials and starting to rescind the policies based on their assertion that there were/are misrepresentations in the insurance application.

Statutory Requirements – In addition to common law standards, several statutory provisions regulate an insurer’s ability to avoid coverage based on a misrepresentation by the insured.  These are found in the Texas Insurance Code, Chapter 705.

The statutes provide:

Life Insurance Lawyers who handle claims denied due to the claim that a misrepresentation was made in the life insurance application must read this 2021, opinion from the Amarillo Court of Appeals.  It is styled, Bertha Arce, Individually And As Representative Of All Others Similarly Situated v. American National Insurance Company.

The deceased insured, Sergio Arce, Jr. took out a policy of life insurance with American.  Within days, Sergio was killed in a car accident and a claim for benefits was made by Bertha Arce (Arce).  American denied the claim based on the assertion that Sergio misrepresented his health condition in the application for the life insurance.

American filed a motion for summary judgment in the trial court which was granted and this appeal followed.

Life insurance claims can take many turns, as any attorney who handles very many of these life insurance claims can tell you.  Here is a 2021, opinion from the Southern District of Texas, Houston Division.  It is styled, New York Life Insurance Company v. Srinivas Varati.

New York has filed a Rule 12(b)(6) motion to dismiss and a motion for judgment on the pleadings.  The Court granted the motions.

Here is some background.  Varati is the administrator for the estate of Shanti Nakirekanti.  Shanti died on February 18, 2019, the same day as her late spouse, Sreenivas Nakirekanti (Sreenivas).  Sreenivas died by suicide.  On March 30, 2017, New York had issued a term life policy to Sreenivas.  The policy had a face value of $500,000 and listed Sreevinas as the sole “owner.”  The policy, and Sreenivas’s application for the policy, listed Sreenivas’s children Pranay and Nitya, each as 50% beneficiary.  Section 3.4 of the Policy’s base provisions (the Base Policy) defines “Beneficiary” as “the person or entity named in the application, or in a notice you sign that gives us [the Company] the information we need[.]”

Life insurance claims attorneys are needed any time an insurance company denies a claim.  Some cases the attorney will help the client make a recovery and other cases, at least the client had the claim investigated.

The Northern District of Texas, Dallas Division, issued an opinion in July 2021, dealing with a claim for accidental death life insurance benefits.  The styled of the case is, Damon Stewart, et al v. Mutual of Omaha Insurance Company.  The facts of the case are tough.

The insured had an accidental death policy with Mutual of Omaha.  The insured is alleged to have died after suffering a fall and hitting his head that caused his death.  A claim for benefits was denied and this lawsuit was filed.  Mutual of Omaha filed a motion for summary judgment based on the records they obtained in their investigation and there being no reliable evidence to the contrary.

There are a few statutes in the Texas Insurance Code that are specific to life insurance policies.  These statutes are found in Sections 705.001 through 705.105.

For an insurance company to deny coverage on a life insurance policy based on a misrepresentation in an application, the insurance company has traditionally been required to establish misrepresentation by the insured that will support a defense in coverage by pleading and proving five elements.  These elements are:

1. the making of a misrepresentation;