Georgia Finds Life Insurance Policies With Intent To Sell Are Legal

On October 25, 2022, the Supreme Court of Georgia answered a certified question from the Eleventh Circuit Court of Appeals concerning Georgia’s insurable interest statute, OCGA § 33-24-3 (1995).

In Crum v. Jackson National Life Insurance Company, No. S22Q0649 (Ga. 2022), the main question, as reframed by the Georgia high court, was “is a life-insurance policy an illegal wagering contract if the insured takes out the policy 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 in causing the policy to be procured?” The federal district court, following a bench trial, had previously concluded that, under Georgia law, an insured could not take out a life insurance policy with the intent to transfer it to someone who lacked insurable interest in the insured’s life. On appeal, the Eleventh Circuit opined that Georgia case law did not definitively address the issue. The Georgia Supreme Court disagreed with the federal district court’s ruling.

In Crum, Kelly Couch, the insured, applied in 1999 for a $500,000 life insurance policy from Jackson National Life Insurance Company. When he applied for the policy, Couch told Jackson that he was healthy, but that was not true. Indeed, Couch knew that he was HIV-positive, which, when he applied for the policy, meant that he had a greatly diminished life expectancy. He bought the policy with the intent to sell it on the secondary viatical settlement market. Eight months after purchasing the policy, Couch did just that: a brokerage agency that specialized in viatical settlements connected Couch with Sterling Crum, who bought Couch’s policy knowing that Couch was HIV-positive and likely had only a few years left to live. Couch died in 2005; Crum

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