Opinion ID: 1103328
Heading Depth: 2
Heading Rank: 1

Heading: Robert Hughes

Text: Hughes owns and operates a family business as a sole proprietorship. Alfa agent Robert Frazure made a cold call to Hughes seeking to sell him a policy, and on October 28, 1982, Hughes purchased a Whole Life 110 policy with a face amount of $75,000 from Frazure. Hughes testified that Frazure showed him the policy and some brochures and told him that he could pay premiums on [the policy] for four years and then the premiums would be paid from the interest that this money accrued. Hughes also stated that Frazure showed him some kind of breakdown relating the policy to Hughes's age and other information. Hughes's insurance application indicated that he chose to utilize the automatic premium loan option, which provided that if Hughes failed to timely pay a premium, then an automatic loan would be taken against the cash value in an amount sufficient to cover the policy premium due. Hughes paid the premiums for over four years, and in January 1987, his wife sent a note to Alfa requesting that the policy be placed on the minimum-deposit payment plan. Alfa then sent Hughes a letter acknowledging that his policy had been placed on the minimum-deposit payment plan and also sent him a check representing the loan amount. Alfa requested that Hughes forward to it a personal check in the same amount as the enclosed check to be applied toward his annual premium. Thereafter, Alfa received sporadic payments from Hughes. Whenever Hughes did not send in a premium payment, an automatic premium loan was used to pay his premium. Alfa sent notices to Hughes explaining the use of the loans. Hughes testified that he did not receive any of the notices. Dave O'Neal, the district manager for Alfa, met with Hughes in June 1994 to discuss the minimum-deposit payment plan. O'Neal testified that he understood from his Alfa training that loans on the policy would be used to pay the premiums and that he explained this payment method to Hughes. Hughes's policy is still in force, and the current death benefit is greater than $90,201.