Downing v. Country Life Insurance Company
In Downing v. Country Life Insurance Company, 473 P.3d 699 (2020), the Supreme Court of Alaska affirmed the superior court’s decision that a mother’s interpretation of her late daughter’s life insurance policy was unreasonable, and that the insurance company had paid out the proper amount upon the daughter’s death. (Id. at 700). In 2015, the daughter had purchased a whole life insurance policy worth $500,000, and a “Paid-Up Additions Rider” (PUAR) worth up to $1,079,014 after 34 years of payments. (Id. at 700–01). The insurance agent explained to the daughter that the PUAR system worked differently than a whole life insurance policy, because the former acted as an investment opportunity, increasing in cash value over time as payments were made. (Id. at 701). In 2016, her mother took over payments of the insurance policy and the PUAR, and four months later, the daughter passed away in an accident. (Id.). The insurance company paid the mother the $500,000, and an additional $108,855 from the payments made on the PUAR policy at that point. (Id.). The mother brought suit, arguing that the insurance policy was reasonably interpreted as offering a flat payout of $1,095,741 upon death. (Id.). The superior court granted summary judgment for the insurance company, holding that though the terms of the policy may have been somewhat confusing, the only reasonable interpretation of the terms was that the PUAR policy did not provide a flat payment. (Id. at 702). The mother argued that the court should look only to the first page of the policy agreement, which did suggest that the payout amount of the PUAR policy would be over a million dollars, making her expectation of this payment reasonable. (Id. at 704). The court rejected this argument. (Id. at 704–05). The court noted the other provisions of the agreement, including illustrations of how the payments would be made, and the consultation the daughter had with the insurance agent when she purchased the policies. (Id. at 705). The court reasoned that these factors precluded the interpretation that a flat payment would be made on the PUAR policy for the maximum possible value in the second year of owning that policy. (Id. at 706). Thus, the supreme court affirmed the judgment of the superior court that the mother’s interpretation of the insurance policy terms was unreasonable. (Id.).