The document outlines various legal considerations related to life insurance contracts. It discusses requirements for forming valid contracts such as having consent between capable parties, lawful objectives, and consideration. Specific issues covered include insurable interest requirements, stranger-owned life insurance restrictions, consent and how it can be impacted by factors like duress or mistake. Grounds for rescinding contracts such as fraud, misrepresentation and materiality are also summarized. The document appears to be presentation materials for a seminar on life insurance legal issues.

1. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Robert R. Pohls Managing Attorney 1550 Parkside Drive, Suite 260 Walnut Creek, California 94596 Tel: 925.973.0300 Fax: 925.973.0330 E-mail: rpohls@califehealth.com WWW.CALIFEHEALTH.COM

2. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Possible Agenda: Partial List Conditional Receipts Temporary Coverage Lapse Premium Offset Insurable Interests STOLI Closed Books of Business Accidental Death Suicide Felony Exclusions Intoxication Exclusions Presumption of Death Beneficiary Changes Community Property Interests Undue Influence Duress Automatic Revocation Statutes Slayer Statute Interpleader Prior Manifestation Delivery Changes in Health Duty to Read Misrepresentation Concealment Materiality Waiver/Estoppel Agent Misconduct Imputed Knowledge Post-Claim Underwriting Impostors Forgery Contestability Foreign Death Claims HIPAA and Privacy Laws Bad Faith Punitive Damages ERISA Unfair Competition Slide 2

3. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Possible Agenda: Partial List Conditional Receipts Temporary Coverage Lapse Premium Offset Insurable Interests STOLI Closed Books of Business Accidental Death Suicide Felony Exclusions Intoxication Exclusions Presumption of Death Beneficiary Changes Father Guido Sarducci’s 5 Minute University Community Property Interests Undue Influence Duress Automatic Revocation Statutes Slayer Statute Interpleader Prior Manifestation Delivery Changes in Health Duty to Read Misrepresentation Concealment Materiality Waiver/Estoppel Agent Misconduct Imputed Knowledge Post-Claim Underwriting Impostors Forgery Contestability Foreign Death Claims HIPAA and Privacy Laws Bad Faith Punitive Damages ERISA Unfair Competition Spanish: Como estausted? Muibuen. Economics: Supply and Demand. Theology: Where is God? God is everywhere. Slide 3

4. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Essential Elements A contract is “an agreement to do or not do a certain thing.” The essential elements for forming a contract are: 1) parties capable of contracting; 2) consent; 3) a lawful object; and 4) sufficient consideration. Slide 4

5. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Parties There must be at least two parties to a contract – a promisor and a promisee – but there may be any greater number. The general rule is that all persons are capable of contracting, except: 1) minors; 2) persons of unsound mind; and 3) persons deprived of civil rights. Slide 5

6. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Example:Sales Agents “A mere soliciting agent or other intermediary operating between the insured and the insurer has authority only to initiate contracts, but not to consummate them, and cannot bind his principal by anything he may say or do during the preliminary negotiations.” Duarte v. Postal Union Life Ins. Co. 75 Cal.App.2d 557, 571 (1946) Slide 6

7. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Insurable Interest A person taking out a policy of insurance upon the life of another must have an insurable interest in the life of the other person. Otherwise, the policy is a mere wager on the life of the person insured, and the policy is void as against public policy. Warnock v. Davis, 104 U.S. (14 Otto) 775 (1882) Cal. Insurance Code §252 Slide 7

8. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Insurable Interest Every person has an insurable interest in the life and health of: (a) Himself; (b) Any person on whom he depends for education or support; (c) Any person under a legal obligation to him for the payment of money or respecting property or services; and (d) Any person upon whose life any estate or interest vested in him depends. Cal. Insurance Code §10110 Slide 8

9. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Insurable Interest An insurable interest, with reference to life and disability insurance, is an interest based upon : · a reasonable expectation of pecuniary advantage through the continued life, health, or bodily safety of another person and consequent loss by reason of that person’s death or disability; or · a substantial interest engendered by love and affection in the case of individuals closely related by blood or law. Cal. Insurance Code §10110.1(a) Slide 9

10. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Example:Stranger-Owned Life Insurance An "interest in the life or health of a person insured must exist when the insurance takes effect, but need not exist thereafter or when the loss occurs." Cal. Insurance Code §286 Typical scenario: · Individual obtains non-recourse loan from 3rd party investor to finance premiums · After 2 years, insured transfers ownership of policy to the investor, who “forgives” the loan Slide 10

11. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Example:Stranger-Owned Life Insurance “Trusts and special purpose entities that are used to apply for and initiate the issuance of policies of insurance for investors, where one or more beneficiaries of those trusts or special purpose entities do not have an insurable interest in the life of the insured, violate the insurable interest laws and the prohibition against wagering on life.” Cal. Insurance Code §10110(d) Effective 1/1/2010 Applies only to policies issued after 7/1/2010 Slide 11

12. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Consent Every contract requires consenting parties. Absent fraud, duress, or mistake, the parties’ consent is determined by the reasonable meaning of their words and acts – ie., not from their unexpressed intentions or understanding. The manifestation of a party’s consent usually is accomplished through an offer and an acceptance. Slide 12

13. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Offers An offer is the manifestation of willingness to enter into a bargain, made in a way that the other person is justified in understanding that his or her consent to the bargain is invited and will conclude it. An offer must be sufficiently definite that the performance promised is reasonably certain. Slide 13

14. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Invitation to Make Offers Suggesting the terms of a possible contract without making a definite proposal is a mere invitation to make offers. A manifestation of willingness to enter into a bargain is not an offerif the other person knows or has reason to know that the person making it does not intend to conclude the bargain until he or she has made a further manifestation of assent. Slide 14

15. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Acceptance The offeror’s manifested intention determines the person(s) with the power of acceptance. The acceptor must know of the offer and manifest assent to its terms. The acceptance must be absolute and unqualified. It also must be communicated to the offeror. Silence ordinarily is not enough. Slide 15

16. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Counter-Offers A qualified acceptance is a new proposal. It constitutes a rejection of the original offer. It also constitutes an offer to enter a new contract with different terms. By making a counter-offer, the offeree loses the power of acceptance with respect to the original offer. No contract is formed unless the counter-offer is accepted. Slide 16

17. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Reality of Consent In rare cases of physical compulsion, a person is caused to manifest consent when the person does not understand the transaction or does not intend to enter a contract. Under those circumstances, the contract is void. When the promisor is deceived as to the nature of his or her act and actually does not know what is being signed (or does not intend to enter a contract), mutual assent is lacking, and the contract is void. Slide 17

18. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Freedom of Consent “A consent which is not free is nevertheless not absolutely void.” Cal. Civil Code §1566 The aggrieved party must rescind by giving prompt notice and offering to restore any consideration received. Taylor v. Hopper, 207 Cal. 102 (1929) Slide 18

19. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Freedom of Consent A party’s consent is not freely given if it is the product of: · Undue influence; · Duress; · Fraud; or · Mistake. Slide 19

20. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Example: Interpleaders “Any person, firm, corporation, association of other entity against whom double or multiple claims are made, or may be made, by two or more persons which are such that they may give rise to double or multiple liability, may bring an action against the claimants to compel them to interplead and litigate their several claims.” Cal. Code of Civil Procedure §386(b) Slide 20

21. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Fraud Fraudis the suggestion, as a fact, of that which is not true, by one who does not believe it to be true. It generally involves: 1) a false representation of material fact; 2) made with knowledge of its falsity; 3) with the intent to induce the person to act upon it; 4) actual and reasonable reliance upon the representation; and 5) resulting damage. The suppression of that which is true, by one having knowledge or belief of the fact, also can be fraud. Slide 21

22. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Mutual Mistake If both parties are mistaken and neither is at fault (or both are equally to blame), the mistake may prevent formation of a contract. Example: If the mistake involves the subject matter of the contract, the contract is void because there was nomeeting of the minds. Raffles v. Wichelhaus, 2 H.&C. 906 But: If one party so negligently expressed itself that the other party reasonably believed an agreement existed, the contract may be enforced. Chakmak v. H.J. Lucas Masonry, 55 Cal.App.3d 124 (1976) Slide 22

23. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Unilateral Mistake Original rule A contract formed when one party has made a unilateral mistake is not voidable unless the other party had reason to know of the mistake or his or her fault caused the mistake. Modern rule A party who has made a unilateral mistake cannot rescind a contract unless: 1) the mistake involved a basic assumption about the contract; 2) the mistake had a material effect on the agreed performances; 3) the mistaken party does not bear the risk of the mistake; and 4) enforcing the contract would be unconscionable. Slide 23

24. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Misrepresentations “If a representation is false in a material point, whether affirmative or promissory, the injured party is entitled to rescind the contract from the time the representation becomes false.” Cal. Insurance Code §359 “Whether the representation was intentionally or unintentionally false does not alter the injured party's right to rescind the policy.” Telford v. New York Life Ins. Co., 9 Cal.2d 103, 105 (1937) Taylor v. Sentry Life Ins. Co., 729 F.2d 652 (9th Cir. 1984) Slide 24

25. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Concealment Concealment is a "[n]eglect to communicate that which a party knows, and ought to communicate.“ Cal. Insurance Code §330 Concealment, “whether intentional or unintentional, entitles the injured party to rescind insurance.” Cal. Insurance Code §331 Slide 25

26. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Materiality “Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages or the proposed contract, or in making his inquiries.” Cal. Insurance Code §334 Slide 26

27. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Materiality Materiality is determined under “a subjective test; the critical question is the effect the truthful answers would have had on [the insurer], not on some ‘average reasonable’ insurer.” Imperial Casualty & Indemnity Co. v. Sogomonian 198 Cal.App.3d 169, 181 (1988) Slide 27

28. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Materiality “The fact that the insurer has demanded answers to specific questions in an application for insurance is in itself usually sufficient to establish materiality as a matter of law.” Thompson v. Occidental Life Insurance Co. 9 Cal.3d 904, 916 (1973) “An incorrect answer on an insurance application does not give rise to the defense of fraud where the true facts, if known, would not have made the contract less desirable to the insurer.” Ransomv. Penn Mutual Life Insurance Co. 43 Cal.2d 420, 427 (1954) Slide 28

29. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Examples:Materiality If insurer knew the truth, it would have rejected the applicant as uninsurable and declined to issue a policy. Wilson v. Western National Life Ins. Co. 235 Cal.App.3d 981, 994 (1991) If insurer knew the truth, it would have issued a policy on different terms (e.g., with higher premiums). Kentucky Cent. Life Ins. Co. v. Marin Bay Park Trust 958 F.2d 377 (9th Cir.1992) Old Line Life Ins. Co. v. Superior Court 229 Cal.App.3d 1600 (1991) Slide 29

30. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Materiality “The trier of fact is not required to believe the ‘post mortem’ testimony of an insurer's agents that insurance would have been refused had the true facts been disclosed.” Thompson v. Occidental Life Ins. Co. 9 Cal.3d 904, 916 (1973) McAuliffe v. John Hancock Mut. Life Ins. Co. 245 Cal.App.2d 855, 858 (1966) Additional evidence: • UW guidelines • UW referral memos Slide 30

31. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Example:Materiality • Clean application denies history of Tx for STD’s • H murders W • Medical records: 3 doctor visits for vaginal warts • UW guidelines: • issue standard if three treatments for same exposure • rate or decline if treatment for multiple exposures • Argument: material because UW would have made further inquiries (e.g., exam; blood test) Slide 31

32. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Materiality “It is not necessary that the misrepresentation have any causal connection with the death of the insured.” Torbensen v. Family Life Ins. Co. 163 Cal.App.2d 401, 405 (1958) Cohen v. Penn Mutual Life Ins. Co. 48 Cal.2d 720, 726 (1957) Slide 32

33. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Contestability A life insurance policy must contain a provision that, except for nonpayment of premiums, it is incontestable after it has been: (1) in force; (2) during the lifetime of the insured; (3) for a period of not more than two years after its date of issue. Cal. Insurance Code §10113.5 Cal. Insurance Code §10206(a) Slide 33

34. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Contestability “When an insurance policy by its provisions is made incontestable after a specified period, the intent of the parties is to fix a limited time within which the insurer must discover and assert any grounds it might have to justify a rescission of the contract." New York Life Ins. Co. v. Hollender 38 Cal.2d 73, 78 (1951) Incontestability provisions do not preclude “the assertion of defenses based upon policy provisions that exclude or restrict coverage." Cal. Insurance Code §10113.5(c) Slide 34

35. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Example:Impostors Facts: · HIV-positive applicant sent impostor to paramedical exam · Applicant died after policy had been in force for 2 years Held: · Contract was valid because there was no mistake about the applicant’s identity – only mistake was about who attended the paramedical exam · Contestability provision bars rescission · No exception for fraud -- even when an impostor! Amex Life Assurance Co. v. Superior Court (Slome Capital) 14 Cal.4th 1231 (1997) Slide 35

36. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Impostors “. . . if photographic identification is presented during the application process, and if an impostor is substituted for a named insured in any part of the application process, with or without knowledge of the named insured, then no contact between the insurer and the named insured is formed and any purported insurance contract is void from its inception.” Cal. Insurance Code §10113.5(b)(1) Slide 36

37. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Duty to Disclose “Each party to a contract of insurance shall communicate to the other, in good faith, all facts within his knowledge which are or which he believes to be material to the contract and as to which he makes no warranty, and which the other has not the means of ascertaining.” Cal. Insurance Code §333 Slide 37

38. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Right to Rely on Applicant An insurer “has the unquestioned right to select those whom it will insure and to rely upon him who would be insured for such information as it desires as a basis for its determination to the end that a wise discrimination may be exercised in selecting its risks." Robinson v. Occidental Life Ins. Co. 131 Cal.App.2d 581, 586 (1955) Slide 38

39. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Waiver “The right to information of material facts may be waived, either by (a) the terms of insurance or (b) by neglect to make inquiries as to such facts, where they are distinctly implied in other facts of which information is communicated.” Cal. Insurance Code §336 Slide 39

40. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Waiver An insurer cannot rescind when it has knowledge that the applicant’s representation was false. DiPasqua v. California etc. Life Ins. Co. 106 Cal.App.2d 281, 284-285 (1951) When insurer has information indicating responses were untrue before it issued the policy, it waives the right to additional information by failing to investigate. Rutherford v. Prudential Ins. Co. 234 Cal.App.2d 719, 735 (1965) Slide 40

41. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Waiver There is no duty to make further inquiries unless the known facts “distinctly imply” misrepresentations that are material. West Coast Life Ins. Co. v. Ward, 132 Cal.App.4th 181, 192-193 (2005) Insurer with knowledge that one of the applicant’s answers is erroneous may, if it chooses, waive that fact and still rescind on the basis of other misrepresentations. Maggini v. West Coast Life Ins. Co., 136 Cal.App. 472 (1934) Slide 41

42. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Example:Waiver Applicant denied using controlled substances (except Rx) Applicant stated his alcohol consumption was limited to a “couple of beers socially” Evidence: Heavy alcohol use; Recreational drug use Problem: Elevated liver enzymes Argument #1: Did not “distinctly imply” falsity because there are other causes of elevated liver enzymes Argument #2: Nothing to imply falsity of misrepresentation about using controlled substances Slide 42

43. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Imputed Knowledge The insurer is charged with knowledge of information given to the agent, even if the insurer does not have actual knowledge of it. Elfstrom v. New York Life Ins. Co., 67 Cal.2d 503 (1967) Where the insured, in good faith, makes truthful answers to the questions contained in the application, but his answers, owing to the fraud, mistake, or negligence of the agent filling out the application, are incorrectly transcribed, the company is estopped to assert their falsity as a defense to the policy. Boggio v. California-Western States Life Ins. Co. 108 Cal.App.2d 597 (1952) Slide 43

44. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Duty to Read “The requirement of fair dealing is laid on both parties to the contract. This requirement entails a duty on the part of the insured to read the contract and the application in accordance with her representations and to report to the company any misrepresentations or omissions.” “By neglecting to inform the Company of the material omissions, the insured became responsible for such misrepresentations or omissions.” Telford v. New York Life Ins. Co., 9 Cal.2d 103, 107 (1937) Layton v. New York Life Ins. Co., 55 Cal.App. 202, 206-207 (1921) Slide 44

45. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Rescission: Duty to Read Insured’s failure to report misstatements in the application does not restore the insurer’s right to rescind if: ·Agent’s explanation of questions made insured unable to appreciate the falsity of the answers. Boggio v. California-Western States Life Ins. Co. 108 Cal.App.2d 597 (1952) ·Applicant does not receive the application or, because of some other action by the agent or insurer, is prevented from reading it. Rutherford v. Prudential Ins. Co. of America 234 Cal.App.2d 719 (1965) Slide 45

46. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Example: Waiver and Imputed Knowledge Application: · 32 years old · 5’1” and 120 lbs. · No Adverse Medical History · No History of Tobacco Use Evidence: · 32 years old · 5’1” and 309 lbs. · Heavy Smoker · HBP; Asthma; COPD; Cardiomegaly; CHF · 10 year history of mental illness Slide 46

47. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Example: Waiver and Imputed Knowledge Impostor: Application completed in L.A. on 3/17 Insured was in a Houston hospital since 3/14 Claim #1: Medical records are wrong Claim #2: Application actually completed in February Claim #3: Agent was told about mental illness Claim #4: Agent never asked “medical” questions Claim #5: Agent completed and forged the application Claim #6: Agent never delivered the policy Slide 47

48. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Consideration Each party to the contract must give (or promise to give) something of value. That value (or “consideration”) may be either: 1) a benefit conferredor agreed to be conferred upon the promisor or someone else; or 2) a detriment suffered or agreed to be suffered by the promisee (or someone else). Slide 48

49. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Contract Formation: Consideration “An insurer is entitled to payment of the premium as soon as the subject matter insured is exposed to the peril insured against.” Cal. Insurance Code §480 Applying premiums to a period before the policy’s effective date may shorten time periods (e.g., the contestability period) that are based on the policy’s effective date. Guerin v. California Western States Life Ins. Co. 229 Cal.App.2d 325 (1964) Slide 49

50. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Example: Temporary Insurance “When a payment is made equal to the full first premium at the time an application for life insurance . . . is signed by the applicant and either (1) the applicant received at the time a receipt for such payment on a form prepared by the insurer, or (2) . . . the insurer, pursuant to its regular underwriting practices and standards, approves the application . . . and the person dies on or before the date of the application . . . but before such policy is issued and delivered, the insurer shall pay such amount as would have been due under the terms of the policy. . . .” Cal. Insurance Code §10115 Slide 50

51. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 Example:Binding Receipt · “There is no coverage under this Receipt if the application contains any material misrepresentation.” · “No death benefit is provided by this Receipt unless death results from an accident that occurs or an illness that first manifests itself after the Application Date.” · “Coverage under this Receipt will end when the first of the following occurs: (a) The application is approved; (b) Notice of disapproval of the application is given; (c) 60 days have expired starting with the Application Date.” Slide 51

52. LEGAL CONSIDERATIONS IN LIFE INSURANCE Northern California Life Insurance Association – September 23, 2010 QUESTIONS? QUESTIONS? Robert R. Pohls Managing Attorney 1550 Parkside Drive, Suite 260 Walnut Creek, California 94596 Tel: 925.973.0300 Fax: 925.973.0330 E-mail: rpohls@califehealth.com Slide 52 WWW.CALIFEHEALTH.COM