In 2001, Turner applied for a life insurance policy from Alfa Life Insurance through Eddins, an…

In 2001, Turner applied for a life insurance policy from Alfa Life Insurance through Eddins, an Alfa agent. Eddins read the questions to Turner, and he recorded her answers on the application. The application specifically provided: “IF ANY ANSWER TO THE FOLLOWING QUESTIONS IS ‘YES,’ THE PROPOSED INSURED IS NOT ELIGIBLE FOR COVERAGE.” Question 12 following this statement was: “Have you ever been diagnosed with insulin-dependent diabetes?” Question 14 was: “In the past 24 months have you been diagnosed WITH or hospitalized for Congestive Heart Failure?” The application also contained the following: AGREEMENT: The foregoing answers are complete and true to the best of my knowledge and belief. I HAVE TRULY ANSWERED THE ABOVE QUESTIONS AND I HAVE READ OR HAD READ TO ME, THE COMPLETE APPLICATION. I REALIZE THAT MY FALSE STATEMENTS or MISREPRESENTATIONS OR CONCEALMENTS WHICH WOULD AFFECT THE ACCEPTANCE OF THE RISK ASSUMED MAY RESULT IN LOSS OF COVERAGE… Turner signed the application completed by Eddins. This application indicated a negative response to questions 12 and 14. Alfa issued the policy, naming Turner’s daughter, Lewis, as the owner and the beneficiary of the policy. In March 2002, Turner died. Shortly thereafter, Lewis submitted a Request for Insurance Benefits. In that request, Lewis indicated that the cause of Turner’s death was congestive heart failure. Alfa began an investigation into Lewis’s request for benefits and, as part of that investigation, obtained Turner’s medical records from her physician. Upon reviewing those medical records, Alfa learned that Turner had been an insulin-dependent diabetic before the date on which Turner completed the application for life insurance. Turner’s medical records also indicated that she had been diagnosed with congestive heart failure within the 24 months preceding her filing the application for life insurance with Alfa. Turner’s primary treating physician listed on Alfa’s Attending Physician Statement that the immediate cause of Turner’s death was a pulmonary embolus, but congestive heart failure and diabetes were contributory causes of her death. Upon learning this information, Alfa sought to rescind the life insurance policy issued to Turner, arguing that the incorrect statements provided on the application regarding Turner’s health were material to its acceptance of the risk and to the amount and cost of the policy coverage. Lewis argued that during the application process, Turner had told Eddins she was a diabetic and that she had previously been on insulin but that she “now took pills instead.” Lewis and Phillips also attested that Eddins responded that the fact that Turner was diabetic could be a problem but that he would “put [the application] through.” Lewis also claimed that neither Turner nor any of her family members had ever been told of her physician’s diagnosis of congestive heart failure. Lewis asserted that Turner answered question 14 (regarding congestive heart failure) to the best of her ability and knowledge and that Turner could not provide information to Alfa that she did not have. Did Alfa have the right to rescind the insurance contract based on misrepresentation?

 

 

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