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Helal v. Lincoln Benefit Life Co.

December 9, 2003


The opinion of the court was delivered by: Jerome B. Simandle United States District Judge



This matter comes before the Court on Defendant Lincoln Benefit Life Company's ("Lincoln" or "Lincoln Life") motion for summary judgment, pursuant to Federal Rule of Civil Procedure 56, to dismiss Plaintiff Neven Helal's claim against it. This is an insurance coverage action and the Plaintiff seeks a payout on her husband's life insurance policy. Hossam Marzook, the Plaintiff's husband, had a life insurance policy through Defendant Lincoln and the Plaintiff was the beneficiary on this policy. The Plaintiff applied for a payout on the policy after her husband's death on June 25, 2001. Defendant denied payout on the policy, rescinded the policy and refunded to Plaintiff all the premiums paid on the policy since its inception plus interest, alleging that the policy lapsed in September, 1999 for non-payment of premium and that the decedent's application for reinstatement in January 2000 was void due to his material misstatement, denying cancer when in fact he had been diagnosed with brain cancer before that time, and to which he succumbed about 18 months later.

Defendant Lincoln Benefit now moves *fn1 for summary judgment, contending that the plain and unambiguous language of Mr. Marzook's policy and the facts in this case preclude a payout on the insurance policy. For reasons discussed herein, this Court finds that there is a genuine dispute as to the fact whether Mr. Marzook, in October 1999, authorized Lincoln to deduct his monthly premiums from his new account at Commerce Bank; that Lincoln in fact made subsequent drafts for Marzook's monthly premiums from his new Commerce Bank account, if all favorable inferences are extended to Plaintiff as the party opposing summary judgment, that Lincoln received the decedent's authorization despite Lincoln's denial that it did. Defendant's motion for summary judgment will be denied.

I. Procedural and Factual Background

A. Procedural History

After Lincoln rescinded the policy, Plaintiff Neven Helal filed suit in New Jersey Superior Court in Atlantic County. Upon a notice of removal by the Defendant, the suit was removed to the Court. Defendant Lincoln has filed a motion for summary judgment with this Court, opposition has been submitted, and the matter is decided without oral argument, pursuant to Rule 78, Fed. R. Civ. P.

B. Facts

On March 29, 1997, Hossam Marzook completed an application to purchase a term life insurance policy from Defendant Lincoln Benefit Life Company. Mr. Marzook was the proposed insured for the policy and also served as the insurance agent for the application. For a period of time, Mr. Marzook owned and operated his own insurance agency, HM Insurance Agency. Lincoln approved Mr. Marzook's application and issued him a life insurance policy with a value of $500,000, effective June 4, 1997. His wife, Plaintiff Neven Helal, was the beneficiary on the policy.

As part of his application for life insurance, Mr. Marzook gave authorization for his monthly premium payments to be automatically withdrawn from his Core States Bank checking account and paid directly to Lincoln. His monthly premium payments were $98.18 and were due on the fourteenth of each month.

Terms of the Insurance Policy

The policy provides a 31-day grace period after the premium due date in which to pay premiums. The policy warns that "[i]f you do not pay the premium due by the end of the grace period, this certificate will lapse as of the due date of the unpaid premium. When the certificate lapses, it is no longer in force." Kirshner Decl. ¶ 5, Exh. C, Policy.

If the insured fails to make a premium payment and lets the policy lapse, the policy can still be reinstated within five years of the lapse. If the insured wants to reinstate a lapsed policy, he must do the following:

1. Request reinstatement prior to the termination date and within five years of the due date of the first premium which was not paid;
2. Give Lincoln Benefit the proof that they require to establish that the insured is still insurable in the stated premium class according to Lincoln's normal rules; and
1. Pay all due and unpaid premiums, plus 6% interest per year, compounded annually.

Kirshner Decl. ¶ 5, Exh. C, Policy.

Pursuant to a Rider in the Insurance Policy, premiums may be waived after the insured becomes "totally disabled," as defined by Lincoln Life, and while that total disability continues. To be eligible for a waiver of premiums, the insured must provide written notice of a claim and proof of total disability. The Rider states that if a policy holder submits a claim for disability waiver, he must continue to ...

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