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Akers v. Columbus Life Insurance Co.

United States District Court, E.D. Kentucky, Northern Division, Ashland

July 19, 2018

PAUL W. AKERS, PLAINTIFF,
v.
COLUMBUS LIFE INSURANCE CO., DEFENDANT.

          MEMORANDUM OPINION AND ORDER

          HENRV R. WILHOIT. JR. UNITED STATES DISTRICT JUDGE

         This matter is before the Court upon Defendant Columbus Life Insurance Company's Motion for Summary Judgment [Docket No. 22]. The matter has been fully briefed by the parties [Docket Nos. 22-1, 25 and 26]. For the reasons set forth herein, the Court finds that Defendant is entitled to judgment as a matter of law.

         I.

         This case arises from the termination of a life insurance policy, Policy No. CM3264530 issued to Plaintiff Paul Akers on May 17, 1993 by Defendant Columbus Life Insurance Company ("Columbus Life"). A copy of the policy is part of the record at Docket No. 22.2.

         A. The Policy

         The policy is not whole life insurance policy, but, rather, a flexible premium life insurance policy. Columbus Life describes this species policy as follows:

[This policy] provides for fixed premium payments throughout the duration of the policy, a flexible premium life insurance policy gives the insured the ability to pay various premium amounts throughout the life of the policy. The only caveat to this flexibility is that the insured must make sure that there is enough paid into the policy in premium payments to cover the monthly cost and expenses of insurance (collectively the "Cost of Insurance"). Thus, the insured has the flexibility to make large lump sum payments, increase premium payments in some months, decrease them in others, or even skip payments - so long as the cash balance in the policy is sufficient to cover each month's Cost of Insurance. Any amounts paid into the Policy exceeding the monthly Cost of Insurance create a cash value "savings" within the policy that earns interest on a tax deferred basis.

[Docket No. 22-1, pg. 1]. Plaintiff does not dispute this description.

         The Policy identifies four situations that trigger the automatic lapse or termination of coverage:

(1) You request that coverage terminate. (Such request will require a surrender of this policy.)
(2) The insured dies. Some riders may provide benefits for other covered persons beyond the insured's death.
(3) The policy matures.
(4) The grace period ends.

Id. (emphasis added).

         It is the fourth scenario which is at issue in this case.

         According to the policy, premium payments are "flexible." The insured could "choose the amount and frequency of payments." [Docket No. 22-2, at p. 8]. However, the Policy states that the "possibility] that coverage will expire prior to the maturity date if premiums paid are not large enough to continue coverage to that date." Id. at p. 3. The Policy explains that, if premiums paid are not sufficient to cover the Cost of Insurance, there will be a grace period of 61 days for the insured to remedy the deficiency. Id. at 9. If the deficiency is not remedied, the Policy lapses and is terminated. Id.

         The "grace period under" the Policy is described as a "period of 61 days" from which there is "insufficient [cash] value" in the Policy to cover the monthly Cost of Insurance. [Id.]. If the Policy fell into grace, Akers was obligated to pay the "amount of premium needed to make the value sufficient... at any time during the 61 day grace period." [Id.]. If the necessary premium needed to make the cash value sufficient was "not paid within the grace period, all coverage ...


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