On appeal from Superior Court, Law Division, Middlesex County.
Approved for Publication March 5, 1996.
Before Judges Landau, Kleiner and Humphreys. The opinion of the court was delivered by Landau, J.A.D.
The opinion of the court was delivered by: Landau
The opinion of the court was delivered by
This appeal by plaintiff Virginia Gamino raises the issue, novel in this jurisdiction, whether our insurance laws mandate continuation of a group accidental death benefit during the thirty-one day period statutorily allotted for conversion of a terminated employee's group life insurance coverage to a policy of individual life insurance. We conclude that the statutory individual life insurance. We conclude that the statutory individual life insurance conversion privilege and automatic thirty-one day continuation of the insured's life insurance benefit is not applicable to the accidental death and dismemberment benefits provided in a separate schedule of decedent's group policy, and accordingly affirm the dismissal of Gamino's complaint for failure to state a cause of action against defendant General American Life Insurance Company.
The Facts and Applicable Statutes
Luis G. Gomez died on September 11, 1992, within thirty-one days after the termination of his employment. He was covered under a group insurance policy purchased by his New Jersey employer, Federal Warehouse, from defendant General American Life Insurance Company (General American). Under N.J.S.A. 17B:27-19, decedent had the right, without evidence of insurability, to purchase "an individual policy of life insurance without disability or other supplemental benefits ..." during the thirty-one day period following termination. The statute goes on to provide, in N.J.S.A. 17B:27-21, that when death ensues within the thirty-one day conversion envelope,
there shall be a provision that if a person insured under the group policy dies during the period within which he would have been entitled to have an individual policy issued to him in accordance with section 17B:27-19 or section 17B:27-20 above and before such an individual policy shall have become effective, the amount of life insurance which he would have been entitled to have issued to him under such individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium there for has been made.
The applicable group policy summary issued to decedent contains a schedule entitled "Life Insurance Benefits" and a separate schedule entitled "Accidental Death and Dismemberment." The "Life Insurance Benefits" schedule sets forth the insured's conversion privileges to an individual life insurance policy, advising that such individual policy "will not include disability or other supplemental benefits." It also recites that if death occurs during the thirty-one days when the insured is eligible to apply for an individual policy of life insurance, the death benefit will be paid even if no conversion application is made.
By contrast, the separate "Accidental Death and Dismemberment" schedule in the policy summary specifically refers to its maximum amount as "equal to the amount of Life Insurance" and provides, "You may not convert this benefit to an individual policy."
General American has paid the face amount of the life insurance benefit but not the accidental death benefit.
Plaintiff Virginia Gamino is the widow of Luis Gomez. She brought this action against General American seeking a declaration that the conversion provision of the group policy is applicable to "life insurance as well as accidental death and dismemberment insurance" and an order declaring that Great American must pay benefits to her under the accidental death and dismemberment portion of the policy. The complaint points to the broad definition of "life insurance" in N.J.S.A. 17B:17-3, which includes "provisions for ... additional benefits in event of death by accident or accidental means ... whether such provisions are incorporated in a policy or contract of life insurance or in a policy or contract supplemental thereto." In consequence, Gamino says, the life insurance conversion privilege required by N.J.S.A. 17B:27-19 and the automatic thirty-one day coverage provided under N.J.S.A. 17:27-21 must be deemed applicable to ...