life insurance litigation

The Tennessee Slayer Statute: How It Applies to Life Insurance Litigation

Published on: December 19, 2018 | by Matt Pulle

Like most states, Tennessee has a slayer statute that prevents a person who intentionally caused the death of a victim from inheriting personal or real property from the victim’s estate. Codified at Tenn. Code Ann. § 31–1–106, the statute also prevents the killer from recovering life insurance proceeds from the victim, even if the killer was a named beneficiary under the policy. The statute is based on the principle that “a wrongdoer will not be allowed to benefit from his crime.”

Under Tennessee case law, a criminal conviction of first-degree murder will allow a third-party to use the slayer statute in civil court to prevent the killer from receiving property or money from the victim. However, even in the absence of a criminal conviction, a person will not be able to recover from the victim if it is shown by a “preponderance of evidence” that he or she caused the victim’s death.

The preponderance of evidence standard is the evidentiary standard used in civil court, and it is easier to meet than the “beyond a reasonable doubt” evidentiary standard used in criminal court. The differences between the two standards are important. A party challenging the killer’s right to a recovery of life insurance proceeds can successfully invoke the slayer statute in civil court, even if the killer was found not guilty of murder in criminal court.

The slayer statute applies not only to someone who kills, but also, to someone who conspires to kill, or hires someone else to kill. It does not apply to acts of self-defense. For example, if a battered wife kills her husband in self-defense, the slayer statute will not prevent her from recovering proceeds from his life insurance policy.

The slayer statute also does not apply to accidental killings, even if the person who caused the death is at fault. The Supreme Court of Tennessee dealt with this issue in Moore v. State Farm Life Ins. Co (1994). In that case, the victim was killed after her husband lost control of the vehicle. The husband was intoxicated at the time and pled guilty to vehicular homicide.

Understanding the Insurable Interest Requirement for Life Insurance Policies, Part 2

Published on: October 5, 2017 | by Matt Pulle

In our last post, we discussed the insurable interest requirement in Tennessee. Under that requirement, the prospective owner of the policy must prove that he or she would suffer some type of loss if the insured were to die while the policy was in effect. This requirement prevents speculators from buying insurance on a person’s life in the hopes that the person dies before the death benefit exceeds the amount of premiums paid.

Obtaining and assigning financial instruments can be a lucrative business. So, sometimes, parties may try to structure a life insurance policy in such a way that it appears that the policy were supported by an insurable interest. Courts, however, may well scrutinize such policies, especially if it appears that a speculator used an elderly person as a conduit to acquire a beneficial interest in a life insurance policy that the speculator otherwise could not acquire.

Understanding the Insurable Interest Requirement for Life Insurance Policies, Part 1

Published on: September 22, 2017 | by Matt Pulle

The law which requires a policy owner to have an insurable interest in whatever is being insured seems fairly straightforward. Under Tenn. Code Ann. § 56–7–101, a person who buys an insurance policy must have an insurable interest in what is being insured. For example, you can only take out a homeowner’s policy on your own home, and not on the home of a stranger.

In the context of life insurance, the insurable interest rule requires that the beneficiary of the policy suffer some type of loss if the insured were to die while the policy was in effect.

For example, a minor child would have an insurable interest in his or her parents. An investment firm would have an insurable interest in an entrepreneur to whom it had just given a sizable loan to start a company. In contrast, if a stranger convinced a wealthy senior citizen to let him or her take out a policy insuring the senior citizen’s life, that policy would be void.

As it relates to life insurance, the insurable interest requirement prevents speculators from buying insurance on a person’s life in the hopes that the person dies before the death benefit exceeds the amount of premiums paid.

In practice, the insurable interest requirement is not as simple as it seems. For example, what if there is an insurable interest at the time the policy is issued, but not at the time the person whose life is insured dies? That question was answered by the Court of Appeals of Tennessee in Trent v. Parker (1979). In that case, a corporation took out a life insurance policy on its CEO. The CEO later left the company, and then filed suit against the company asking the court to cancel the policy. Ruling in favor of the CEO, the lower court voided the policy stating that the company no longer had an insurable interest in its former employee.

Recent Court of Appeals Decision Shows How Difficult It Is in Tennessee to Challenge a Beneficiary’s Rights

Published on: August 9, 2017 | by Matt Pulle

Under what circumstances will a court rule that the named beneficiary under a life insurance policy is not entitled to receive the proceeds of the policy? In Estate of Lane v. Courteaux (2017), the Court of Appeals of Tennessee wrestled with that issue, before ruling against the party who argued that a named beneficiary should not be entitled to any proceeds under the policy. According to the court, a named beneficiary of a life insurance policy will almost always be able to recover the death benefit, even when there are compelling reasons to award the proceeds to another party.

The facts of Estate of Lane are tragic. A wife had a $600,000 life insurance policy in which she named her husband the sole beneficiary. Later, she was diagnosed with terminal cancer. Shortly after, her husband learned he also had terminal cancer.

Although the husband was not expected to outlive his wife, she passed away before he did. Shortly before her death, the wife, while retaining her husband as a co-beneficiary, added her sister, Amanda Courteaux, as a co-beneficiary. This caught the husband by surprise. When he discovered, after her death, that his wife did add her sister as a beneficiary of the life insurance policy proceeds, he speculated that his wife wanted her sister to provide for their son, who was on the verge of losing both his parents. Under the life insurance policy at issue, the wife’s sister was entitled to $300,000 of the policy proceeds.

Later, the husband believed Courteaux was going to use the proceeds for purposes other than his son’s welfare. He then filed a complaint against Courteaux seeking to have nearly all of her share of the proceeds placed into a trust for the benefit of his son. In his lawsuit, the husband sought relief, in part, under the legal principle of promissory estoppel.

Prior to the trial, the husband passed away, and his executor and estate were substituted in his place. Before he died, the husband gave a deposition in which he testified about a document created by his wife that he discovered after her death. According to the husband’s testimony, the document indicated his wife wanted Courteaux to have only $30,000 of the proceeds for herself, with the remainder of her share to be transferred to her husband to use for their son’s benefit. (It is not clear from the court opinion what exactly this document was, or what it said.) At trial, the deceased wife’s half-sister also testified wife wanted Courteaux to receive only a $30,000 share of the proceeds.

At trial, Courteaux conceded that she and her sister both promised to take care of each other’s children if anything ever happened to one of them. Nevertheless, she testified that the life insurance proceeds were “my money.”