11 Aug INSURANCE COMPANY UNINSURED
A recent decision of a San Antonio appellate court determined that faulty drafting of an annuity contract by the insurance company who issued the annuity resulted in a beneficiary being paid far more than the contracted terms.
The annuity contract provided for payments during the joint lives of a husband and wife. However, the amount of monthly annuity payments was to be reduced by 50% on the first to die of the married couple. After the wife died, the husband continued to receive the full payments for more than 10 years as the husband failed to notify the insurance (annuity) company of his wife’s death. The insurance company found out about the overpayments after the husband died. The company made a claim against the estate for the excess payments. The executor rejected the claim.
Although the insurance company won at the lower court level, the appellate court ruled that there was no duty to repay since there was no express duty of the insured to notify the company in the annuity contract when the first to die of the married couple. The court also said since there was no notification requirement in the contract, it was the duty of the insurance company to review death records from time to time. In addition, the court said the insurance company’s claim for money was barred by limitations (suit was too late).
If you would like to know more, attend one of our free upcoming virtual Estate Planning Essentials workshops by clicking here or calling 214-720-0102. We make it simple to attend and it is without obligation.
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