## Facts

- Jose Morales applied for a life-insurance policy from Amex Life Assurance Company in January 1991 and allegedly misrepresented his health status.
- Amex required a medical examination as a condition of issuance.
- An impostor appeared for the examination; identification was not requested or produced, and the blood test was HIV-negative.
- Amex issued a policy on Morales’s life effective May 1, 1991, containing an incontestability clause barring contests after two years in force during the insured’s life if premiums were paid.
- Morales paid premiums until his death from AIDS-related causes on June 11, 1993, more than two years after the effective date.
- Before his death, Morales sold/assigned the policy to Slome Capital Corp., which became owner/beneficiary and submitted a claim.
- After the claim, Amex investigated, concluded an impostor took the exam, and denied benefits based on an “impostor defense,” asserting the policy was void and not protected by incontestability.

## Issues

1. Whether an insurer may assert an “impostor” medical-examination defense to avoid paying life-insurance benefits after the incontestability period has expired.
2. Whether fraud involving an impostor at the medical exam is treated as application fraud subject to the incontestability clause when the named insured applied for insurance on his own life and paid premiums for the required period.

## Decision

- The California Supreme Court denied the insurer’s requested writ relief and rejected the proposed impostor-defense exception to incontestability on these facts.
- The Court held the incontestability clause barred Amex from contesting coverage after two years, notwithstanding the impostor exam, because Morales applied for insurance on his own life and the policy remained in force with premiums paid for the requisite period.
- The Court treated the impostor-exam scheme as a form of application-related fraud that must be raised, if at all, within the contestability period.

## Legal Principles

- Statutorily required incontestability clauses function like statutes of limitation and repose: after the stated period (and payment of premiums), the insurer may not contest coverage based on application fraud.
- The clause does not deny the existence of fraud; it sets a firm deadline by which defenses, including fraud, must be established.
- Where the policy was intended to insure the named insured’s life and the insured applied and paid premiums, an impostor’s participation in the medical examination is within the scope of incontestability once the period expires.
- Courts should not create judicial exceptions to mandatory incontestability statutes absent legislative authorization, particularly where doing so would erode finality and increase post-claim litigation over fraud discoverable during the contestable period.

## Conclusion

The court held that, after the incontestability period runs, an insurer cannot avoid liability by characterizing an impostor medical examination as rendering the policy void when the named insured applied for coverage on his own life and kept the policy in force by paying premiums for the required time.


Amex Life Assurance Co. v. Superior Court, 14 Cal. 4th 1231 (Cal. 1997)