Louisiana Court Holds that Conviction of Murder, and Not Suspicion, Forfeits Life Insurance Proceeds

An owner of a life insurance policy has the right to name a beneficiary, an individual who will receive the proceeds from the policy in the event of the insured’s death. Generally, the owner may name anyone as the beneficiary. However, a principle sometimes referred to as the “Slayer’s Rule” prevents a beneficiary from recovering the proceeds of a life insurance policy when he or she is involved in the murder of the insured.

Justice A recent case before a Louisiana District Court made clear that it is a conviction of the murder of the insured that triggers forfeiture. Under federal common law and Louisiana state law, an individual is prohibited from receiving funds from an insurance plan if that person is convicted in the death of an insured.

The facts of this case involve the death of an insured, Mr. Scott, who was killed by a lethal stab wound to his chest. Mr. Scott was survived by his widow, Mrs. Scott, and by his son, Mr. McMasters. Mr. Scott had a life insurance policy, including accidental death and dismemberment coverage, and it totaled $482,000.

Most recently, the beneficiary designated on file with the life insurance policy for Mr. Scott named Mrs. Scott as the sole primary beneficiary. Mrs. Scott also completed an affidavit for the policy benefits.

The insurance company filed an interpleader, which allows them to initiate a lawsuit and compel the other parties, Mr. McMasters and Mrs. Scott, to litigate the dispute over who is the proper beneficiary of the life insurance proceeds. An interpleader action is appropriate here because the insurance company holds the property, in this case the proceeds of the life insurance policy, but is unclear to whom the benefits should be transferred.

The issue is that Mrs. Scott has not been ruled out as a suspect in Mr. Scott’s death.   If Mrs. Scott were disqualified from receiving the life insurance benefits, Mr. McMasters would receive these benefits, under the policy’s facility of payment provision. By filing the complaint in court, the insurer has asked the court to determine to whom benefits should be paid.

The court reviewed the standard for granting a Rule 56 motion for summary judgment. Under this Federal Rule of Civil Procedure, the record, or the evidence before the court, cannot demonstrate a genuine dispute of fact. In other words, a rational trier of fact could not find for the non-moving party, here Mrs. Scott.

In this case, the court found the application of the “Slayer Rule” premature because Mr. McMasters did not refer the court to Mrs. Scott’s conviction for murder. Nor does he contend that by being a mere suspect, as opposed to having been convicted, she is precluded from recovery. Instead, he contends that she is the only suspect in the homicide. The court reiterated the rule that a conviction triggers forfeiture.

Mr. McMasters’ motion for summary judgment was denied without prejudice. This means that Mr. McMasters may bring another motion if, for example, he has additional factual evidence, such as proof of conviction. The court also noted that Mr. McMasters could show the court case law holding that an individual suspected, but not convicted, of murder is disqualified from receiving insurance benefits.

This case demonstrates the importance of complying with insurance policy requirements, and more generally, avoiding disqualification from insurance proceeds. The life insurance lawyers in Louisiana at the Lavis Law Firm – Personal Injury & Accident Attorney provide guidance and representation to both insured individuals and policy beneficiaries. Contact us at 866.558.9151 or online.

More Blog Posts:

Nifty Online Insurance Tool Comes to Texas But Not Yet to Louisiana, Louisiana Insurance Lawyer Blog, March 8, 2012

What If a Tree Falls on Your House Because of Tropical Storm Lee, Louisiana Insurance Lawyer Blog, September 4, 2011


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