Wells Fargo Bank, N.A., et al. v. Pruco Life Insurance Company

Summary

The Florida Supreme Court held that under the plain language of Florida’s incontestability statute (Fla. Stat. § 627.455), a life insurance policy that had the required insurable interest at its inception is incontestable after two years, even if the policy was procured as part of a stranger-originated life insurance (STOLI) scheme. The court ruled that because the statute enumerates specific exceptions (nonpayment of premiums, disability, and accidental death provisions) and does not include a STOLI or lack-of-insurable-interest exception, no other exceptions may be implied. The insurable interest requirement of § 627.404(1) was satisfied where the named beneficiaries were the insured’s spouse or daughter, and the court declined to create a judicial exception for STOLI policies, leaving any policy change to the legislature.

Holdings

1. A life insurance policy that has the insurable interest required by § 627.404 at its inception becomes incontestable two years after issuance under the plain language of § 627.455, even if the policy originated from a STOLI scheme.
2. The court declined to answer this question, rephrasing the certified questions into one and answering only that question. The good-faith procurement issue was subsumed.

Questions Presented

1. Whether a life insurance policy that was part of a STOLI scheme can be challenged as void ab initio for lack of an insurable interest after the two-year contestability period in section 627.455 has expired.
2. Whether section 627.404 requires that an individual with the required insurable interest also procure the insurance policy in good faith.

Disposition

other