## Facts

- Dr. John G. Griffith bought an AMA-sponsored group level term life insurance certificate issued by United States Life Insurance Company in the City of New York (US Life) and administered by AMA Insurance Agency, Inc. (AMAIA), effective November 15, 1998.
- The coverage included a $400,000 death benefit and a $250,000 accidental death benefit; Elizabeth Wilson was the primary beneficiary.
- Premiums were due semiannually on May 15 and November 15; Dr. Griffith did not pay the premium due May 15, 2007.
- The certificate provided a 31-day grace period after the due date during which coverage remained in effect and stated US Life “may extend the grace period by written notice” specifying the end date if payment remained unpaid.
- After nonpayment, US Life sent a “Reminder Notice” stating that, to assure active coverage, full payment had to be received no later than 60 days from May 15, 2007 (July 14, 2007).
- The certificate also allowed reinstatement without written approval if overdue premium was paid within 31 days after the end of the grace period.
- On July 23, 2007, Dr. Griffith directed his bank to pay the overdue premium; the bank mailed a check on July 25, 2007 to AMAIA.
- Dr. Griffith died on July 28, 2007 after being struck by a motor vehicle while bicycling.
- AMAIA received the check on July 30, 2007 and returned it, asserting the certificate had lapsed and could not be reinstated without a new application.
- Wilson claimed benefits; US Life and AMAIA denied the claim, asserting the grace period ended June 15, 2007 and reinstatement could not occur after death.
- The circuit court granted summary judgment for Wilson against both US Life and AMAIA; US Life and AMAIA appealed. Illinois law governed by a choice-of-law provision.

## Issues

1. Whether the certificate was in force when Dr. Griffith died on July 28, 2007.
2. Whether AMAIA could be held jointly and severally liable with US Life for payment of benefits under the certificate.

## Decision

- The appellate court affirmed summary judgment against US Life, holding the certificate was in force at the time of death.
- The court held the reminder notice functioned as a written extension of the grace period to 60 days from the premium due date.
- The court held the reinstatement mechanism was satisfied because payment was effective upon dispatch under Illinois’s mailbox rule and occurred before the insured’s death and within the reinstatement window.
- The appellate court reversed summary judgment against AMAIA and remanded with instructions to enter judgment in AMAIA’s favor because AMAIA had no contractual duty to pay benefits.

## Legal Principles

- When an insurance contract authorizes the insurer to extend a grace period by written notice specifying an end date, a notice stating an extended “no later than” date for payment to maintain active coverage may operate as a contractual extension of the grace period.
- Under Illinois contract law’s mailbox rule, an acceptance (including a timely payment functioning as acceptance of an offer to continue or reinstate coverage) is effective upon dispatch when sent by an invited medium, not upon receipt.
- A “no reinstatement after death” argument fails where, under the governing contract rules, reinstatement became effective before the insured’s death.
- An administrator or servicing entity is not liable for policy benefits absent an express contractual undertaking to pay; liability rests with the insurer that issued the coverage.

## Conclusion

The court treated the insurer’s reminder notice as extending the grace period, applied Illinois’s mailbox rule to treat the premium payment as effective upon dispatch before the insured’s death, affirmed benefit liability against the insurer, and rejected joint liability against the policy administrator for lack of a contractual payment obligation.


United States Life Ins. Co. in the City of N.Y. v. Wilson, 198 Md. App. 452, 18 A.3d 110 (Md. Ct. Spec. App. 2011)