Menu

Expect Focus Life, Annuity, and Retirement Solutions, June 2019

Life Insurer Defeats Bid to Apply Policy Lapse Statute Retroactively

Life, Annuity, and Retirement Litigation   |   Life, Annuity, and Retirement Solutions   |   Financial Services Regulatory   |   Securities & Investment Companies   |   July 11, 2019
Download   
Share Page

In Smith v. Jackson National Life Insurance Co., a beneficiary of a life insurance policy that lapsed prior to the death of the insured sued Jackson National for failing to provide sufficient notice of termination and wrongfully denying the death benefit.

The policy was issued in 1997, and it was governed by Utah law. Five years after the policy issued, the Utah Legislature passed section 31A-22-402(5), providing, in pertinent part, that the “insurer shall send written notice of termination of coverage ... at least 30 days before the date that the coverage is terminated.” The beneficiary claimed that Jackson National violated this law by sending written notice that immediate payment was due only 11 days prior to terminating the policy. The insured failed to make any payments, and died two days after the date of the lapse — on the very day that the final “Notice of Policy Lapse” was mailed by Jackson National. The beneficiary argued that, due to insufficient notice, the policy should not have been terminated and the death benefit should have been paid.

Jackson National moved for summary judgment, arguing that: (1) the statute did not retroactively apply; (2) Jackson National complied with the statute based on prior notices sent to the insured; and (3) the statute did not provide the plaintiff with a private right to sue. The court agreed with the first argument (rendering the other arguments moot), holding that the law in effect at the time the policy was issued “became a part of the parties’ insurance contract” and that the statute did not apply retroactively because the Utah Legislature never declared that intent, and because the statute created substantive contractual rights rather than mere “practice and procedure.” The court found that the plaintiff’s claim failed as a matter of law, and entered judgment for Jackson National. 

 


©2019 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.

Subscribe to Publications

Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.