Peek v. New York Life Ins. Co.

• Decision Date: 15 May 1928
• Docket Number: 38904
• Citation: 219 N.W. 487,206 Iowa 1237
• Parties: ELSIE L. PEEK ESTATE et al., Appellees, v. NEW YORK LIFE INSURANCE COMPANY, Appellant
• Court: Iowa Supreme Court

219 N.W. 487

206 Iowa 1237

ELSIE L. PEEK ESTATE et al., Appellees, v. NEW YORK LIFE INSURANCE COMPANY, Appellant

No. 38904

Supreme Court of Iowa, Des Moines

May 15, 1928

REHEARING DENIED NOVEMBER 16, 1928.

Appeal from Marshall District Court.--B. F. CUMMINGS, Judge.

Action for disability benefit, provided for by a policy of life insurance. Judgment for plaintiff. Defendant appeals.

Reversed.

Carr Cox, Evans & Riley, for appellant.

C. H E. Boardman, for appellees.

MORLING, J. STEVENS, C. J., and FAVILLE, DE GRAFF, ALBERT, and WAGNER, JJ., concur.

OPINION

MORLING, J.

The insured suffered total disability preceding her death, for which her executor made proof. Defendant paid the life insurance, but refused to pay the disability benefit, for the reason that the benefit was, by the terms of the policy, payable only on the specified anniversary of the policy, occurring during the lifetime and continued disability of the insured, and was not payable, either in whole or in part, if the insured was not living on such anniversary. Plaintiff's claim is:

"That, as Elsie Peek paid in advance for disability protection for one year, that she is entitled to that protection. That the contract means that said disability amount will be paid on the anniversary date, which merely fixes the time of payment, and is not a limitation on liability."

The policy is a limited payment life insurance policy for $ 2,000 (with provision for doubling in specified cases). It requires payment of annual premiums of $ 99.38. One section provides that, whenever the company receives proof "before default in the payment of premium, that the insured, before the anniversary of the policy on which the insured's age at nearest birthday is 60 years and subsequent to the delivery hereof, has become wholly disabled by bodily injury or disease so that he is and will be presumably, thereby permanently and continuously prevented from engaging in any occupation * * * then

"1. Waiver of Premium. Commencing with the anniversary of the policy next succeeding the receipt of such proof, the company will on each anniversary waive payment of the premium for the ensuing insurance year, and, in any settlement of the policy, the company will not deduct the premiums so waived. * * *

"2. Life Income to Insured. One year after the anniversary of the policy next succeeding the receipt of such proof, the company will pay the insured a sum equal to one tenth of the face of the policy and a like sum on each anniversary thereafter during the lifetime and continued disability of the insured. Such income payments shall not reduce the sum payable in any settlement of the policy. The policy must be returned to the company for indorsement thereon of each income payment. * * * The annual premium for the total and permanent disability benefits is $ 3.46, and is included in the premium * * * Any premium due on or after the anniversary of the policy on which the age of the insured at nearest birthday is 60, shall be reduced by the amount of premium charged for the disability benefits."

By the terms of the policy, the $ 2,000 is payable to a named beneficiary.

The date of the policy is December 18, 1917. Insured was then 37 years old. Insured was totally disabled from December 12, 1924, to the date of her death, which occurred November 4, 1925. Proper proof for the disability claim was made. Plaintiff (executor of the estate of the insured) sued for $ 200. The court awarded $ 194.41, evidently a pro rata for that part of the year during which the insured lived.

The ultimate question is whether, in case of the death of the insured before the anniversary on which a benefit would be otherwise payable, her estate is entitled either to the one tenth of the policy or to an apportionment of it.

A separate and distinct premium is paid for the disability benefits,--namely, $ 3.46,--leaving $ 95.92 for the life-insurance premium. The provision for disability benefits is severable from the life insurance. This is apparent from the stipulations that the payments shall not reduce the sum payable in settlement of the policy; that the annual premium for the disability benefits is $ 3.46; that the payment of premium for benefits ceases at sixty.

The total and permanent disability benefits consist, not only of the annual payments of one tenth of the policy, but also of the waiver of premiums. $ 3.46 was, therefore, paid for both the life income and for the waiver of premiums. What proportion of the $ 3.46 is attributable to the waiver of premiums and what to the life income...