Alabama Supreme Court Takes Hardline On Life Insurance Contracts

When Wanchetta Reese went to the local Alfa Life Insurance office to sign up her husband, she followed all the procedure that was required including answering all health questions truthfully. However, the two agents that sold her the policy did not follow procedure and when informed that the husband suffered from serious health problems told Mrs. Reese not to worry and never included the information in the application. When Mr. Reese died a few months later, Alfa denied the claim stating Mrs. Reese lied in the application and signed the agreement knowing the proper health information had been intentionally omitted which voided the agreement.

In Alfa Life Insurance Corporation et al.v.Wanchetta Reese, the Alabama Supreme Court held that Mrs. Reese failed to properly disclose the health issue which voided the policy under the terms of the contract. A proper verbal disclosure by Reese of the health conditions to the agents was not enough to overcome the contract provisions and the fact that she relied on the representations by Alfa’s agents instead of reading the agreement did not change the issue. While it is always a good idea to read a contract, this case shows that residents of Alabama will need to take extra precautions to protect themselves when signing a life insurance agreement and never rely on verbal promises. In the end, the words in the agreement will always prevail.

Special thanks to Turney Berry for bringing this article to my attention.