A New York and New Jersey Lawyer Who Represents Policyholders and Beneficiaries in Life Insurance Denial Cases

An interesting case, Halberstam v. The United States Life Insurance Company in the City of New York, came down the pike from the Brooklyn state supreme court holding that even though an imposter submitted to a life insurance examination, the policy was nonetheless valid.

A $5 million policy was purchased by the Leo G. Family Trust on the life of Leo Goodstein with the trust named as full beneficiary. Subsequently, the beneficiary was changed to another entity who ultimately was the plaintiff seeking to have the policy paid.

Here’s where it gets interesting. The life insurance company conducted an investigation, after the insured died, and found that another person submitted to the insurance exam; apparently, the blood sample taken in a nursing home from Goodstein did not match with that provided in the examination.

Goodstein passed away more than two years had passed since the issuance of the policy. Hence, the new beneficiary asserted that the contestability period had expired and payment was required.

The court acknowledged that there is a narrow exception to the incontestability clause, when an impostor pretends to be the insured, in which case the life insurance contract is actually with the imposter. Hence, the purported insured is a “stranger” to the policy and cannot invoke the contestability period.

But, in this case, it was significant that a trust had purchased the policy and named itself as beneficiary, then made a perfectly legal assignment of the policy to the plaintiff. As such, it was not a “stranger” to the policy and could invoke the contestability period. The insurance company had the opportunity to contest the policy within a two-year period, but it failed to do so.

The life insurance company also failed with its claim that the policy was void because the trust had no insurable interest in the impostor’s life. The policy was not void ab initio due to a lack of an insurable interest, but rather was contestable within the two-year period (which, of course, had lapsed). The court further supported its position by observing that the legislature specifically carved out exceptions to the contestability period in cases of fraud in the purchase of disability and health insurance policies, but provided for no such exception for life insurance policies.


One Response to “Brooklyn Court Enforces Policy Where Imposter Submits to Examination”

  1. Liran says:

    Interesting read – especially from an insurance agent’s perspective. I wonder how the imposter got away with taking an exam for someone else. Usually they verify signature and i.d when doing your medical.

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