United States District Court, E.D. Kentucky, Northern Division, Ashland
PAUL W. AKERS, PLAINTIFF,
COLUMBUS LIFE INSURANCE CO., DEFENDANT.
MEMORANDUM OPINION AND ORDER
R. WILHOIT. JR. UNITED STATES DISTRICT JUDGE
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.
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.
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
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).
the fourth scenario which is at issue in this case.
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.
"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