Supreme Court: Insurance Payout Required Even If Motive for Life Insurance Contract Is Suspicious

10 Life Insurance Policies Purchased, Death by 'Extreme Choice' After Insurer's Exclusion Period
1st Trial: "Insurance Taken Out for Fraudulent Purpose" → 2nd Trial: "Not Clearly Proven"

[Asia Economy Reporter Heo Kyung-jun] The Supreme Court has ruled that even if the motive of a policyholder who has contracted multiple life insurance policies is suspicious, the insurance payout must be made if no correlation is proven.

The Supreme Court's Second Division (Presiding Justice Cheon Dae-yeop) announced on the 23rd that it upheld the appellate court's ruling in favor of the plaintiff in the insurance claim lawsuit filed by the bereaved family of the deceased A against three insurance companies.

A, who was engaged in the clothing business in China, returned to Korea in 2015 after his business failed. Between January and March of that year, he signed a total of 10 life insurance contracts (with total insurance benefits exceeding 3.1 billion won). Around March 2017, exactly two years after the last life insurance contract was signed, A disappeared and was found dead. According to the insurance contracts, the exemption period during which the insurer is not obligated to pay benefits if the policyholder commits suicide is two years.

The first trial court ruled in favor of the insurance companies, judging that A had no stable income when signing the insurance contracts and had suffered significant losses from stock investments, thus subscribing to the insurance with the intent to fraudulently obtain insurance benefits.

However, the appellate court stated, "Although there are some doubts about the motive or purpose considering that the deceased signed multiple insurance contracts in a short period, it was not clearly proven, and suspicious circumstances alone cannot definitively establish an intent to fraudulently obtain insurance benefits," and ordered partial payments of about 50 to 80 million won each to the bereaved family. The Supreme Court also agreed with the appellate court's judgment.