Court Opinion

ID: 4134549
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:51:40.831572+00
Date Added: 2024-06-11T14:36:27.832800
License: Public Domain

Honorable Clay Cotten               Opinion No. M-117
Commissioner of Insurance
State Board of Insurance
Austin, Texas 78701                 Re:   Whether under Article
                                          3.50, Section 2, Texas
                                          Insurance Code, the
                                          State Board of Insurance
                                          is authorized to approve
                                          group life insurance
                                          forms, containing pro-
                                          visions for reduction
                                          or denial of death claims
                                          In cases where death is
                                          caused by suicide after
                                          the master policy has
                                          been In force for two
Dear Mr. Cotten:”                         years or more.
      You have requested ourLoplnlon a8 to whether you may
approve group life insurance forms which contain provisions
for denying or reducing death claims in cases where death
results  from suicide after the master poIlcy has been In
force for two (2) years or longer.
     Article   3.50, Section 2, Texas Insurance Code, reads in
part as follows:
            II     nor shall any policy of group life
     insurance be delivered   in this State unless It
     contains In substances the following   provlslons,
     or provisions   which In the opinion of the Com-
     missioner are more favorable    to the persons ln-
     sured, or at least as favorable, to the persons
     insured and more favorable   to the policyholder.  . .
           “(2) A provision that the validity  of the
     policy shall not be conte,sted, except for non-
     payment of premiums, after’ it has been ln force
     for two (2) years from its date of Issue; Andy
     that no statement made by any person ,lnsused
      ,.,I,?

                 ;y.
                        ’   ,

Honorable      Clay Cotten,     page 2, Opinion No. M-117

     under the policy relating   to his Insurability
     shall be used in contesting    the validity  of
     the Insurance with respect to whlcrh such state-
     ment was made after such ineuranoe has been In
     force prior to the aonte’st for a period of two
     (2) years,durlng   suoh peEson’s lifetime   nor
     unless~ it Is contained in a.wrl$ten Instrument
     signed by him.
             “( 3) A provision   that a copy of the appll-
      cat.lon, IS any, of the policyholder      shall be
      attached to the policy when Issued, that all
      statements made by the, policyholder      orby the
      persons Insured ehall be deemed representtitlons
     .and not warranties,     and~.that no statement  made
      by any person Insured shall be ueed in any oon-
      test unless a copy of the Instrument containing
      the statement Is or has been furnished to such
      person or to his beneflciarl-”
       Article   3.50, Section 2(2, &ontalns exactly the same
wording as the former Artlole       b,764a, Se&ion l(l),   Vernon’s
Annotated Civil Statutes (1948), about whlah a portion of
AttorneY General Opinion Ho. O-5060 was written.          Thet
opinion dlacussed cases construing the slmllar lncontest-
ability    requirement of former Artlole     47 2, V.A.C.S. (1948),
{currently     Aktlole 3.44, .Insu.rance Code. f
       The queatlon before ua Is whether the two ,year contest-
ability   period under Article 3.50, Section 2(2) begins running
from the date when the master p&Icy Is lssutid, or from the
various dates when Individuals   beoome Insured under the master
policy.
     Attorney          General Opinion lo.   O-5060 holds   as follows;
           “In our oplnlon the aviation    clause violates
     the Incontestable   requirements of Artlcl&s 4764s
     and &‘64b, ‘VernonUs Annotated Civil Statutes,      lnso-
     far as it ,purports to provide a defense after the
     expiration  of the contestable   peslods therein set
     out, and sueh clause sl;tould not be approved by the
     Board for that r?ason,
      The above mentioned “aviation    clause’ Is similar to .the
suicide clause now inlquestion,    for,such   @auses. purport to
reduce or deny ,beneflts In case of death from the specified
Honorable Clay Cotten, page ‘3, Opinion No.N-117 "

causes after the two (2) year period specified In Article
3.50, Section 2(2). The above Opinion No. 0-5060, together
with Article 3.50, Section 2, in effect dictates that the
suicide clause should not be approved by the Board if such
clause purports to be effective after the contestability
period.
     The first,part of Article 3.50; Section 2(2) specifies
that a policy must contain 'a provision that the validity of
the olicy shall not be contested, except for non-payment of
prem urns,after it has been in force for two years from the
date of its issuq . . .' (emphasis added). The word "policy"
can onlyTan   the master policy, for an individual covered
by group insurance Is Issued a certificate rather than a
policy. However, the remaining portion of Article 3.50,
Section 2(2) provides as follows:
          I,     and that no statement made by any
     person'insured under the policy relating to his
     insurability shall be used In contesting the
     validity of-the Insurance with respect to which
     such statement .was made after such insurance has
     been in force prior to the contest for a period
     of two (2) years during such'person's lifetime
     nor unless it is contained In a written lnstru-
     ment signed by him." (emphasis added).
     The above language refers to the period of time for which
the individual has been Insured, and lsln conflict with the
first quoted portion of Article 3.50, Section 2(2). The first
portion, if interpreted and ,applied literally, will render
the second portion inoperative, for the,time at which the in-
dividual becomes insured will then be Irrelevant. In resolvlnm
the.conflict we must consider public policy and the reasons fo:
which the statute was passed, See Newsom v. State, ,372 S.W.2d
681, 682-683 (Tex. Crim. 1963); 53 Tex.~Jur. 2d 229-234, Statutes,
Sections 1.60and 161.
     Article 3.52, Section 2(c) and~sectlon 4(a), Texas In-
surance Code, illustrate application of the rule to individual
policies that was intended to be applied to group policies
under Article 3-50, Section 2(2). That rule allows contest-
ability through suicide clauses for a period of two years after
the individual becomes insured. The same rule is applied by
Article 22.13, Section l(2) and Section 5, Texas Insurance Code.
                                                         ..

Honorable Clay Cotten; page 4; Opinion No. M-117

     Article 3.50, Section 2(s) and the latter portion of
Article 3.50; Section 2(2), supra, both show that the Legls-
lature contemplated a.contestablllty period based,on the
date of the lndlvldualts Insurance'rather than the,date of
the master'pollcy. It is our opinion that the contestability
period consists of the two years followlng the date when the
Individual becomes Insured under the master policy.
                    S U M.M A R Y
                    -------
          The lnsuranoe Issued to an Individual under
     a group policy does,not become.incontestable under
     Article 3.50, Section 2, Texas Insurance Code until
     two years from the date when that Individual becomes
     insured under the master policy.
                             Y&r0   very truly,

                                orney General of Texas
Prepared.by Fielding Early
Assistant Attorney General
APPROVED:
OPINION CONMITTEE
A. J. Carubbi, Jr., Chairman
Staff Legal Assistant
W. 0. Shults, Co-Chairman
John Reeves
Tom Rack
Robert Flowers
Tom Thurmund

                          -540-~