Question

Fred's policy clearly states that he must send his premiums directly to the insurer's home office in Columbus, Ohio. For five years, however, Fred always paid his life insurance premiums to his agent instead. The agent then passed them on to the home office. Last month, on the 20th, Fred was hit by a truck and killed two days after receipt by the agent of Fred's latest annual premium. The insurer denied the death claim by stating the contract premium was not paid. However, the beneficiary is able to collect the death benefit based on application of which of the following legal principles?

Answer 1

The beneficiary is able to collect the death benefit based on the legal principle of waiver and estoppel.

Step-by-step explanation:

The beneficiary is able to collect the death benefit based on the legal principle of waiver and estoppel.

Waiver refers to the voluntary relinquishment of a known right. In this case, the insurer had knowledge that Fred was consistently paying his premiums to the agent instead of directly to the home office, but they did not enforce the policy requirement. By accepting the premiums from the agent for five years without objection, the insurer waived their right to demand direct payment from Fred.

Estoppel refers to the legal principle that prevents a party from denying a fact or claim due to their actions or representations. In this case, the insurer's acceptance of premiums from the agent created a reasonable belief for Fred that he was complying with the policy requirements. Therefore, the insurer is estopped from denying the death claim based on non-payment of premiums.