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Christine Boyd was designated as the beneficiary of a life insurance policy issued by Aetna Life Insurance Company on the life of Christine’s husband, Jimmie Boyd. The policy insured against Jimmie’s permanent total disability and also provided for a death benefit to be paid on Jimmie’s death. Several years after the policy was issued, Jimmie and Christine separated. Jimmie began to travel extensively, and Christine therefore was unable to keep track of his whereabouts or his state of health. Jimmie, however, continued to pay the premiums on the policy until Christine tried to cash in the policy to alleviate her financial distress. A loan previously had been made on the policy, however, leaving its cash surrender value, and thus the amount that Christine received, at only $4.19. Shortly thereafter, Christine learned that Jimmie had been permanently and totally disabled before the surrender of the policy. Aetna also was unaware of Jimmie’s condition, and Christine requested that the surrendered policy be reinstated and that the disability payments be made. Jimmie died soon thereafter, and Christine then requested that Aetna pay the death benefit. Decision? |
Explanation
The conclusions of the case can be:
Individual C has made a mistake at the time of surrendering the policy because of the lack of knowledge of Individual J's disability. Individual C has not even put efforts towardcollecting the information about the same. So, the demand of reviving the policy after surrender is not correct.
The insurance company has a responsibility to represent all the facts to Individual C about the present conditions of Individual H. The insurance company must have a proper health check ofthe holder of the policy during the tenure of the policy to ensure the disability and death. These conditions make the company liable to pay damages.
Verified Answer
There is the possibility of two decisions in this case:
Individual C'scontention is not correct because the policy was surrendered without checking the present health condition of Individual J.
Insurance Company A is going tobe liable because the policy claims were settled without checking the health conditionof Individual H at the time when policy was in effect.
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