The Bee Gees were right: Staying Alive is important

Watch the full video at https://rumble.com/v2v599w-bee-gees-were-right-staying-alive-is-important.html and at https://youtu.be/QgAhIJh_oRQ

On January 27, 2021, Dr. Travis Richardson an application for an individual life insurance with Pacific Life seeking $4,816,949.00 in coverage. Blevins was Dr. Richardson’s fiance and was listed as the primary beneficiary of the policy. Lamar Breshears was an insurance agent for Pacific Life. Champion Agency (“Champion”) handled details. Dr. Richardson died unexpectedly before the policy was delivered and the insurer refused to pay.

IN Pacific Life Insurance Company v. Katie Blevinsno. 3:21-CV-00143 JM, United States District Court, ED Arkansas, Northern Division (June 15, 2023} USDC resolved the beneficiary’s claim.

FACTS

On February 1, 2021, Champion sent Dr. Richardson’s application to Pacific Life with instructions to process the application and to mail the policy to Champion at its office in Albuquerque, New Mexico. Pacific Life welcomed Dr. Richardson’s application on February 2, 2021. On March 11, 2021, Pacific Life’s underwriting department approved Dr. Richardson for insurance and the initial monthly premium of $16,668.68 was paid. On the same day the policy was approved, Pacific Life uploaded an electronic copy of the policy to its Planned Performance Tracking portal (the “PPT Portal”).

On March 12, 2021, Dr. Richardson emailed Breshears asking him when the policy was active. Breshears responded the same day, saying, “Today. If you were to die today, the policy would pay a death benefit.” Breshears was wrong because Dr. Richardson died unexpectedly on March 14, 2021.

The physical policy was received by Champion on March 15, 2021. Pacific Life refunded the first premium payment on March 25, 2021, stating that the policy was not “in effect” at the time Dr. Richardson’s death because it had not been “delivered” as required by the application and the policy.

ANALYSIS

It was undisputed that delivery of the policy was a valid condition for Blevins to be entitled to receive payment under the policy. The application states that: “[c]excess takes effect when the policy is delivered and the entire first premium is paid only if at that time each proposed insured lives, and all answers in this application remain true and complete.” (emphasis mine.).

The policy, which contains the application, states that an insurance policy is in effect and provides a death benefit to the insured on the effective date of the policy and associated riders. The policy date for this policy was March 11, 2021, a date before Dr. Richardson died.

Pacific Life argued that delivery of the policy required Dr. Richardson had received and accepted a physical copy of the policy. It is undisputed that this did not happen, and Pacific Life moved for summary judgment. The court found that there were no material facts in dispute and agreed that the policy was not delivered.

The fact that the impugned terms are not defined does not render them vague and ambiguous.

Importantly, the USDC noted that the policy must be read as a whole and effect given to all provisions. Construction neutralizing any provision of a contract should never be adopted if the contract can be construed to give effect to all provisions. The policy in question unequivocally states that it is in force (defined as meaning in practice and paying death benefits), “subject to your approval of delivered insurance and payment of the original premium.” (my emphasis).

Although the term “policy date” was clearly confusing even to Breshears, it did not neutralize the delivery and acceptance requirements.

In addition to the delivery requirement, the application stated that coverage under the policy would take effect when delivered “only if the proposed insured was then alive and “all answers in this application are still true and complete.” Under Arkansas law, “if the policy was sent [to the agent] unconditionally for the sole purpose of delivering to the insured” the dispatch of the policy from the insurance company to the agent would constitute a constructive delivery. The burden of proof to show that the policy has been unconditionally delivered to the agent for delivery to the insured is on the claimant.

Breshears testified that he understood delivery of the policy to mean “physically sending the policy to the client” and that “one hundred percent of his policies have been delivered on paper.” Pacific Life has determined that it physically mailed the policy to Champion in accordance with the instructions it received in connection with the mailing of Dr. Richardson’s application. Included in the posted policy was a delivery receipt and an addendum to the application to correct minor inaccuracies. Blevins did not find that there is a genuine issue of material fact on the issue of constructive delivery of the policy.

Because the outstanding delivery requirements had not been communicated to Breshears or Champion at that time, she claims that those delivery requirements were waived. However, that does not support her claim that the delivery condition itself was waived.

The Court has no doubt that Dr. Richardson, Breshears and Blevins believed that Dr. Richardson was covered by the policy effective March 11, 2021. However, Pacific Life’s motion for summary judgment was granted.

People buy life insurance because they realize that life is a disease that all people suffer from. Eventually we all die. Wanting to protect her fiancé, Dr. Richardson applied for a life insurance policy that he expected to have for many years only to die before the policy was delivered to him. Insurance policies must be read as a whole. In this case, the policy never took effect because he was not alive when the policy was delivered. A sad result but in a correct way.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

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