Notes

capital life insurance
The United Benefit Life Insurance Company Versus the Appeal Of A State Court Order
This article discusses the events that led up to the cancellation of a United Benefit Life Insurance company's policy in March 2021. We shall review the reasons for the policy being "canceled." There was a dispute between United Benefit Life Insurance Company and Cody, LLC concerning a term life policy referred to as "listed." At various times throughout the term life of the policy, the insured had received a lump sum of cash payoffs from deceased life insurance proceeds. The insured had been paying off this cash on a monthly basis for about five years.
In March 2021, United Benefit Life Insurance Company received a court order from a Washington County Circuit Court granting summary judgment in favor of the insured. The court found that the insured had failed to disclose important facts relating to the nature of his life insurance policy to the insurer prior to renewing the policy. Specifically, the insured had not properly disclosed that he had been receiving payments from life insurance proceeds from deceased relatives. Accordingly, the court ordered the cancellation of the policy.
We shall focus on the events leading up to this point. On or about the day that United Benefit Life Insurance Company informed the insured that it was not going to renew its contract, the insured called the attention of counsel to learn whether the policy would be automatically converted to a "cash value" annuity at the time of the death of the covered person. Counsel advised the insured that it would be. Shortly thereafter, the life insurance company sent a letter to the insured stating that the policy would be converted to a "cash value" annuity at the death of the covered person. This correspondence was received by the insured on or about the day that he died.
The insurer did not inform the insured that the notice of default had been received. Thereafter, the insured learned of this event from a member of the family who claimed an injury at work. The claim was processed by the insurance company. The company, through its underwriters, provided coverage to the claimant on the basis of the injury.
Subsequently, and on the same day that the policy was converted into a "cash value" annuity, the insured began receiving payments from the life insurance company for the benefit of his surviving spouse, or if the covered person had no dependents, for the benefit of all beneficiaries. The insurer had not made any provision in the original agreement with regard to how these payments were to be distributed. Accordingly, the court found that the distribution of the funds was based solely upon the discretion of the insurer. Thereafter, the insurer agreed to pay interest on the accrued cash during the life of the covered person.
The insured may have reasonably relied on the terms of the life insurance policy. He assumed that the terms of the contract would provide that whatever death benefits were paid out to his beneficiary would also be paid to his wife, or another surviving wife. It is that assumption, however, that the insurer arbitrarily decides how it will distribute the death benefits. In some cases, for example, the insurer will elect to exclude one beneficiary while paying out the other. Or, in other cases, the insurer will elect to treat each beneficiary as a separate entity from the others and award it its death benefit.
Appellant suffered a total loss of his life savings. linkedin filed a complaint against the insurer with the state court of appeals. Thereafter, the state court issued a writ of mandamus directing the insurer, pursuant to its corporate operating policies, to correct the errors described in appellate's complaint. The writ of mandamus was granted to the state court by the United States Supreme Court.
The insurer did correct the errors in its initial methodology for computing the death benefits. It admitted that its earlier methods, which allowed for a variable premium assessment of risk and a discretionary premium program based upon the applicant's "life expectancy," were inadequate. Also, it was found that the application of the discretionary premium rule in some circumstances could result in double indemnity premium payments to one beneficiary and an unrelated beneficiary. Finally, the insurer was ordered to reimburse the applicant for all expenses incurred that arose as a result of the judgment of the state court. Appellant requested that this judgment be affirmed because, as a matter of law, such awards constitute compensation for personal injury and property damage that have been or might have been caused by the insured's conduct of business.
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