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Insurer May Waive Policy Provisions

Insurer May Waive Policy Provisions

ERISA and Life Insurance News
(October 17, 2011)

Globe Life and Accident Ins. Co. v. Lewis,
No. 1:09-cv-3574 (N.D. Ga. Aug. 2, 2011)

Globe Life brought an interpleader action to resolve competing claims by the insured’s daughters to death benefits payable under a policy of life insurance.

Regarding the insured’s right to change beneficiaries, the policy provided that by "written form satisfactory to [Globe Life] the Certificate Holder may change the beneficiary at any time, without the beneficiary’s consent." The policy further provided: "When recorded by [Globe Life] at our Home Office, the change will be effective as of the date the form is signed, whether or not the Certificate Holder is living when the form is recorded."

Less than a month before the insured’s death, she changed the beneficiaries of the policy from one daughter to the other daughters by making a telephone call to Globe Life’s customer service department.

In the interpleader action, the former beneficiary asserted a counterclaim against Globe Life for benefits and for a bad faith penalty, alleging among other things that Globe Life was not permitted to change the beneficiary designation in response to a telephone request in light of the policy provisions requiring a written change of beneficiary form.

Granting summary judgment to Globe Life on these claims (and also discharging the company from the interpleader action), the court held that the insurer was permitted to waive the change of beneficiary provision.

"Under Georgia law," the court wrote, "an original beneficiary cannot object if an insurance company waives compliance with a policy provision prescribing the method for changing a beneficiary, since this provision is solely for the benefit of the insurer." Quoting Bohannon v. Manhattan Life Ins. Co., 555 F.2d 1205, 1211 (5th Cir. 1977).

This waiver occurred, the court reasoned, when Globe Life changed the beneficiary in response to the telephone call. "Given that this occurred nearly a month before [the insured] died, Globe had a right to waive the policy’s change-of-beneficiary provisions at that time," the court concluded.

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H. Sanders Carter
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