11th Circuit Breathes Life into Insurer's Case for Recission of Policy

In a case based on Alabama law, the 11th Circuit Court of Appeals (in MEGA Life v. Pieniozek) overturned a lower court's decision to grant a summary judgment for the beneficiary of a life insurance policy. The carrier tried to rescind the policy because the decedent overstated her income on the application and swore to the application's veracity. The appeals court ruled that the lower court must look into whether the insurer would have, in good faith, issued the policy at that rate or limits if true facts had been known to the carrier at the time of the application(paraphrasing Alabama Code sec. 27-14-7(a)). It's an interesting case because the case seems to hinge on the carrier's internal rules of underwriting (i.e., would the policy limits have been as high for the correct income of the applicant), as opposed to an argument that misstating income on a life insurance policy application changes the risk involved.