According to the Eleventh Circuit, that life insurance policy you took out on your own life with the intent to sell it to a stranger may not in fact be void as an illegal wagering contract. In Jackson National Life Insurance Co. v. Crum, 54 F.4th 1312 (11th Cir. 2022), the Eleventh Circuit adopted the Georgia Supreme Court’s answer to a certified question on this subject, reversing the district court’s ruling that a life insurance policy was void and unenforceable.
Kelly Couch was HIV-positive with a short life expectancy when he acquired a life insurance policy from Jackson National Life Insurance Company (“Jackson”) in 1999. A few months later, he sold it through a viatical insurance broker to Sterling Crum. After Couch died in 2005, Crum made a claim for the death benefit under the policy. Jackson declined to pay the benefit and sued for a declaration that the policy was void ab initio. After a bench trial, the district court found that Couch purchased the policy with the intent to sell it in the near future to an individual who had no insurable interest in his life, but without the involvement or complicity of the ultimate purchaser (Crum) at the time of Couch’s purchase. The district court concluded on these facts that the policy was void and unenforceable under Georgia law as an illegal human life wagering contract. Crum appealed.
The Eleventh Circuit determined that Georgia law did not definitively resolve this issue and certified the following question to the Georgia Supreme Court: “When an insured has purchased a life insurance policy with the intent to sell the policy to a third party with no insurable interest, must either the subsequent purchaser or an intermediary be complicit in the procurement of the policy before the latter can be deemed to be an illegal wagering contract and thus void ab initio?”
The Georgia Supreme Court answered the question, holding that: “under Georgia law, a life insurance policy taken out by the insured on his own life with the intent to sell the policy to a third party with no insurable interest, but without a third party’s involvement when the policy was procured, is not void as an illegal wagering contract.” Crum v. Jackson Nat’l Life Ins. Co., 315 Ga. 67, 68, 880 S.E.2d 205, 206 (2022).
In a per curiam opinion, the Eleventh Circuit followed the Georgia Supreme Court’s decision and reversed the district court’s ruling that the life insurance policy was void and unenforceable. The court also permitted Jackson to brief an alternative argument that the contract is unenforceable for laches, due to the delay between Couch’s death and Crum’s submission of a claim. But the Eleventh Circuit declined to decide the issue and instead remanded the case to the district court to determine whether Crum’s claim for benefits is alternatively barred by laches.