Wilmington Trust, National Association v. Ameritas Life Insurance Corp

Wilmington Trust sued Ameritas Life Insurance to collect $6 million in death benefits under a policy on Jacqueline Leone's life. Ameritas refused to pay, arguing the policy was a stranger-originated life insurance arrangement in which investors, working through a program run by Peachtree Settlement Funding, arranged for Leone to take out the policy so it could be sold to investors who had no personal stake in her life, violating Georgia's insurable-interest law. A federal district court in Georgia was weighing cross-motions for summary judgment and asked the Supreme Court of Georgia to clarify when a third party (rather than the insured) counts as having 'procured or caused to be procured' a policy under Georgia's insurance statute. The court held that a third party can be found to have procured a policy, even if the insured signed paperwork and took some steps, if the insured was effectively acting as an instrument or strawman for the third party. Courts must look at the totality of the circumstances, including who paid premiums, who arranged the deal, and who controlled the trust holding the policy, rather than any single fact.

A third party is deemed to have 'procured or caused to be procured' a life insurance policy on another person's life, making it void as an illegal wager absent an insurable interest, if the third party effectively obtained the policy with the insured acting merely as an instrument, judged by the totality of the circumstances rather than any single fact like premium payment.

The ruling shapes how Georgia courts and insurers evaluate disputes over life insurance policies tied to investor-funded schemes. It affects insurers defending against payout claims, investors and trusts holding such policies, and families whose loved ones participated in similar premium-financing arrangements.

Certified questions answered

1. The court explained that Georgia's insurable-interest statute (OCGA § 33-24-3), which requires someone taking out a policy on another person's life to have a real stake in that person's continued life, exists to prevent wagering contracts that bet on someone's death.
2. Reviewing pre-1960 Georgia cases like Walton and Rylander, the court found that a policy is void as a cover for a wager if the insured merely acts as an agent or 'strawman,' obtaining the policy on paper for the real benefit of a third-party investor who pays the premiums.
3. The court rejected Wilmington Trust's proposed rule that an insured's consent and participation in the application process alone shows the insured procured the policy, holding that a third party's role in causing the policy to be procured must also be weighed even when the insured signed the paperwork.
4. The court also rejected Ameritas's proposed rule that paying the premium alone conclusively proves a third party procured the policy, reasoning that focusing on a single factor could sweep in ordinary situations, like borrowing premium money from a friend, that are not wagers.
5. The court concluded that determining who procured a policy requires weighing the totality of the circumstances, such as who located the insured, who controlled the trust and paperwork, whether the arrangement benefited the insured or investors, and how sophisticated and involved the insured was.
6. Applying this framework, the court answered the certified questions by holding that a third party procures a policy when it is the one who effectively obtained it, even if the insured played some role, leaving the district court to apply this totality-of-circumstances test to the facts of the Leone policy.

• stranger-originated life insurance
• insurable interest
• wagering contracts
• life insurance policy dispute
• certified question