Articles Posted in Life Insurance

Here’s a question someone in Fort Worth, Dallas, Arlington, Grand Prairie, Mansfield, Lake Worth, Azle, Grapevine, or anywhere else in Texas might ask. When is someone considered dead for purposes of collecting on a life insurance policy?

Let’s start with this. For an intended beneficiary under an insurance policy to collect death benefits the insured must be dead. But what if there is no body? Also doubt about the death may arise when there is uncertainty over the identity of a body. This was the case in a 1987 Texas Supreme Court case styled, Davidson v. Great National Life Insurance Company. This was also an issue in the 1892 United States Supreme Court case, Mutual Life Insurance Company of New York v. Hillmon.

Legal presumptions can aid in determining whether a death has occurred. In the Texas Civil Practices & Remedies Code, Section 133.001, some help is found. This section says, “Any person absenting himself for seven consecutive years shall be presumed dead unless it is proved that the person was alive within the seven-year period.

Ask someone in Dallas, Fort Worth, Arlington, Grand Prairie, Mansfield, Duncanville, Azle, Crowley, Cedar Hill, Saginaw, Flower Mound, or any other place in Texas, what an insurable interest in a life insurance policy is, and the chances are that they will not be able to tell you. This has been discussed in a couple of earlier blogs.

As stated before, those who have an insurable interest in the life of another falls into three general classes:

1) one so related by blood or affinity that he or she wants the other to continue to live, irrespective of monetary considerations;

Most people living in Arlington, Grand Prairie, Dallas, Fort Worth, Mansfield, Irving, DeSoto, Cleburne, Weatherford, and all the other places in Texas, will have some form of life insurance on their lives. It may be a policy from work, or a policy thru their bank, or a policy they have purchased through their insurance agent. The question becomes; Who can you take a life insurance policy out on and who can be named as a beneficiary in the policy? When a spouse is the person who is insured or the person who is the beneficiary under the life insurance policy there is not usually a problem. But what if it is someone else?

An insurable interest is what is required. Or an expectation of a pecuniary benefit. So, who has an insurable interest or an expectation of a pecuniary benefit?

The Texas Supreme Court in 1942, in the case, Drane v. Jefferson Standard Life Insurance Company, stated; “A person that has a reasonable expectation of pecuniary benefit or advantage from the insured’s continued life has an insurable interest.”

People living in Grand Prairie, Dallas, Fort Worth, Arlington, Carrollton, Burleson, Aledo, or anywhere else in Texas who have life insurance are usually going to have a place in the life insurance policy where they name a beneficiary. Things will happen after naming the beneficiary to make the insured want to change the beneficiary.

The person named as a beneficiary in a life insurance policy is the person who receives the benefits of the policy upon the death of the person insured by the policy. The named beneficiary is often times a spouse of the named insured or the children of the named insured. Other times it is a creditor or an estate. Sometimes it is a business partner.

It is well settled law that a life insurance beneficiary must have an insurable interest in the insured’s life. This was stated as early as 1894 by the Texas Supreme Court in the case, Cheeves v. Anders. It was restated in 1998 by the Houston Court of Appeals [14th Dist.] in Tamez v. Certain Underwriters at Lloyd’s, London International Acc. Facilities, and again in 1998 by the Tyler Court of Appeals in Stillwagoner v. Travelers Insurance Co.

An insured in Grand Prairie, Dallas, Fort Worth, Coppell, Richardson, Duncanville, Aledo, Arlington, or anywhere else in Texas may ask this question: When does the life insurance policy become effective? Here is some guidance.

Most life insurance policies expressly state the “effective date” of coverage. This date may be earlier than, or later than, the date the first premium is paid or the dates the policy is issued or delivered. Often, an insurance policy may have an effective date, an issue date, and a policy date — and they may all be different, causing confusion or misunderstanding. If the dates differ, disputes may arise over when the policy actually took effect or terminated. The effective date can be important in setting the due date for subsequent premiums and thus the date of any lapse for failure to pay a premium.

An example to think about is found in the case, Life Insurance Company of the Southwest v. Overstreet. This is a Texas Supreme Court case decided in 1980. Here is a brief summary of the case:

What are clauses that are illegal / prohibited? Someone from Grand Prairie, Arlington, Mansfield, Burleson, Crowley, Lake Worth, or other places in Texas may ask that question. Here are a few examples of clauses / provisions that are illegal in Texas when they are included in a life insurance policy.

The following provisions cannot be included in life insurance policies:

1. Per Texas Insurance Code, Section 1101.053, a policy cannot limit the time to sue to less than two years. Section 1101.053 reads: “A life insurance policy may not include a provision that limits the time during which an action under the policy may be commenced to a period of less than two years after the date the cause of action accrues.”

No matter if you live in Dallas, Fort Worth, Mesquite, Garland, Duncanville, De Soto, Hurst, Bedford, Aledo, or anywhere else in Texas, any insurance policy you purchase must have certain provisions in it. The following are some of those provisions.

The Texas Insurance Code, Sections 1701.002 thru 1701.151, says life insurance issued in the State of Texas must be approved by the Texas Department of Insurance. Policies must contain these provisions:

1) Benefits shall be payable in currency. See Texas Insurance Code, Section 1102.002. The Texas Department of Insurance can withdraw approval of policies that offer payment in foreign currency that is less stable than United States curerency.