United States Life Insurance Company v. Wilson

Facts

Dr. Griffith purchased an 'American Medical Association-Sponsored Group Level Term Life Insurance  Policy,' underwritten by D. The Policy was for a 10-year term. P was the primary beneficiary. If Dr. Griffith died 'while this [life] insurance is in force,' then, upon presentation of proof of his death to D, D would pay the beneficiary the scheduled benefit. The scheduled benefit for death was $400,000, with an additional accidental death benefit of $250,000. Dr. Griffith purchased the Policy through AMAIA, a subsidiary of the American Medical Association. AMAIA acted as the third-party administrator for D, meaning that it was responsible for billing and collecting premiums. AMAIA was authorized to receive premium payments on the Policy. Payments could be made to D at D's Home Office or to an authorized agent. Dr. Griffith elected to make semi-annual premium payments for the Policy, due on or before May 15 and November 15 of each year. The premiums were billed by AMAIA and the premium payments were made to it, at its office in Chicago. The Policy had a 31 days grace period after the due date. Each premium, after the first, may be paid up to 31 days after its due date. The policy will stay in effect during this period. If the premium is not paid by the end of this period, such insurance will end at that time. D may extend the grace period by written notice. Such notice will state the date insurance will end if the premium remains unpaid. If the coverage ceases as provided in the Grace Period provision, the policy may be reinstated. Reinstatement must be made within 90 days after the due date of the first unpaid premium. Reinstatement was subject to 1.) Payment of all overdue premiums; and 2.) Written approval by United States Life of the required evidence of insurability. However, such evidence will not be required within 31 days after the end of the Grace Period. Dr. Griffith failed to pay the May 15, 2007 Policy premium. AMAIA sent him an undated 'REMINDER NOTICE,' stating: 'To assure active coverage, full payment of the premium must be received no later than 60 days from the due date.' The due date was again listed as May 15, 2007. After June 15, 2007, AMAIA sent Dr. Griffith an undated 'LAPSE NOTICE.' It stated: This coverage remained in effect during the 31 day Grace Period. Since the premium was not paid by the end of the grace period, your coverage has now lapsed. If you wish to reinstate simply complete and sign the enclosed Reinstatement Form and mail it along with the remittance portion of this notice. A pre-addressed envelope is enclosed for your convenience. Please note that your forms must be received within the next 30 days. The form accompanying the 'LAPSE NOTICE' was entitled 'APPLICATION FOR REINSTATEMENT OF COVERAGE,' and subtitled, 'STATEMENT OF GOOD HEALTH AND INSURABILITY.' On July 23, 2007, Dr. Griffith electronically directed that a premium payment of $369.46 be made to AMAIA. Bank of America documents in the summary judgment record show that a check for that amount 'was sent to AMA Insurance Agency on [Wednesday] 07/25/07 and delivered on [Monday] 07/30/07.' Dr. Griffith did not send D the 'APPLICATION FOR REINSTATEMENT OF COVERAGE' or any other evidence of insurability.  On Saturday, July 28, 2007, Dr. Griffith was struck and killed by a car. P submitted a claim to AMAIA for the death benefit and accidental death benefit under the Policy. AMAIA denied the claim. P sued Ds for breach of contract. The court granted P's summary judgment motion. Ds appealed.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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