Does the clause making the policy effective

Assignment Help Business Law and Ethics

Reference no: EM133195373

Facts:

On October 26, a Country Life Insurance agent went to the house of Tyrone and Maria Anderson. He persuaded the Andersons to buy a life insurance policy and accepted a check for $1,600. On his way out the door, he gave the Andersons a "conditional receipt for medical policy," dated that day. The form stated that the Andersons would have a valid life insurance policy with Country Life, effective October 26, but only when all conditions were met. The most important of these conditions was that the Country Life home office accept the Andersons as medical risks after the company scheduled a medical examination. The Andersons were pleased with the new policy and glad that it was effective that same day.

Tyrone died in a car accident four weeks later. Country Life declined the Andersons as medical risks and refused to issue a policy. Maria Anderson sued. Country Life pointed out that medical approval was a condition to being covered. In other words, the company argued that the policy would be effective as of October 26, but only if it later decided to make the policy effective. It had not made that decision as of the date of Tyrone's death.

At Trial

Plaintiff argued that the policy was a scam. The so called "conditional receipt for medical policy" is designed to trick customers and then steal their money. The company leads people to believe they are covered as of the day they write the check. But they aren't covered until much later, when the insurer gets around to deciding the applicant's medical status.

The company gets the customer's money right away and gives nothing in exchange. If the company, after taking its time, decides the applicant is not medically fit, it returns the money, having used it for weeks or even months to earn interest. If, on the other hand, the insurance company decides the applicant is a good bet, it then issues the policy effective for weeks or months in the past, when coverage is of no use. No one can die retroactively. The company is being paid for a period during which it had no risk.

Defendant, Country Life, argued that it would be impracticable for Country Life to issue life insurance policies without doing a medical check. That is the road to bankruptcy and would mean that no one could obtain this valuable coverage. They further argued that they do a medical inquiry as quickly as possible as it is in their interest to get the policy decided one way or the other.

The policy clearly stated that coverage was effective only when approved by the home office, after all inquiries were made. The Andersons knew that as well as the agent. If they were covered immediately, why would the company do a medical check?

Question 1: Does the clause making the policy effective only after a medical examination violate public policy? Explain

Question 2: What other basis for a lawsuit might Maria have against the insurance company? Explain

Question 3: Based on your answers to Nos. 1 and 2 who will win this case and why?

Reference no: EM133195373

Questions Cloud

Benefits of this expansion of earned income tax credit : The Secretary of the Treasury has read lots of research indicating that the Earned Income Tax Credit (EITC). University of California Irvine. ECON 151.

Write a report of the advertise local green community : GESC 290 - Wilfrid Laurier University - Review options for financial instruments such as Storm Water Management Levies to fund more sustainable infrastructure.

Investigate family-religion from sociological perspective : University of Phoenix This week, our focus shifts to social institutions and the role they play in shaping our lives and society.

Describe the contents of medical records : Describe the contents of medical records. Explain what can happen if a state fails to comply with the Patient Protection and Affordable Care Act of 2010 (PPACA)

Does the clause making the policy effective : Does the clause making the policy effective only after a medical examination violate public policy? Explain and What other basis for a lawsuit might Maria

Demonstrated operational excellence : Northwestern Polytechnic University-Note how they are a differentiator in the market. Explain what actions the company took to achieve operational excellence.

Determining the main point of a communication : 1. ______ listeners listen for the main ideas in communication whereas ______ listeners listen to the way communication is spoken.

Identify ways in which human activities affect environment : prepare a report regarding carbon emissions from homes, and investigate the ways in which human activities affect the environment

How did the end of wwi affect the us economy : What were the major differences between the 1920s and the 1930s? How did the end of WWI affect the U.S. economy? Grossmont College.

User Account

All Pages