The Covenant of Good Faith Requires Insured to Honestly Report Health Conditions on Application for Life Insurance


Material Misrepresentations on Life Insurance Application Requires Rescission

Howard Tenzer (Howard) appealed from the district court’s grant of summary judgment in favor of Minnesota Life Insurance (Minnesota Life) in Howard Tenzer, Legal Guardian on behalf of A.T. v. Minnesota Life Insurance Company, United States Court Of Appeals for The Ninth Circuit (October 21, 2020) and sought reversal.


All of Howard’s claims stem from the rescission by Minnesota Life of an insurance contract with Howard’s brother, Mark Tenzer (Mark).

Rescission of a life insurance contract under Nevada law is lawful when a putative insured made material misrepresentations to the insurer, or when an insurer would not have issued the policy, or would have issued the policy on different terms, had the putative insured provided accurate information. The materiality of misrepresentations is only subject to summary judgment where reasonable minds cannot differ and materiality is established as matter of law.

Mark made numerous health-related misrepresentations on his life insurance policy application. He failed to disclose his history of exogenous steroid use, sleep apnea, abdominal issues, doctors’ visits, surgery and diagnostic tests. Minnesota Life’s underwriter, John Helberg, testified in a sworn affidavit and at his deposition that Mark’s misstatements were material to the risk to be assumed by Minnesota Life and that, given accurate health information, Minnesota Life would have rejected Mark’s application.


Howard did not offer evidence to rebut Helberg’s sworn testimony. Viewing the evidence in the light most favorable to Howard, the Ninth Circuit concluded that rescission was proper as a matter of law because reasonable minds could not differ on whether Mark’s misrepresentations were material . The was no problem that Minnesota Life would not have issued the same policy given accurate information.

Further, the district court properly held that Minnesota Life did not waive its right to rescind Mark’s policy. Under Nevada law, an insurer waives its right to rescission if, before issuing a policy, the insurer already has “full information” about the misrepresentations it later relies upon to justify rescinding that policy.

The insurer was entitled to rely on Mark’s representations. Howard provided no authority for the proposition that Nevada law imposes an affirmative obligation to investigate further rather than rely on the representations in the application.

Because Minnesota Life was entitled to rescind Mark’s life insurance policy, it cannot be held liable for breaching that policy since, by rescission, the policy never existed. When an insurer is legally entitled to rescind a policy, there can be no breach of the contract of insurance nor can there be a finding of bad faith.

Finally, the district court correctly granted summary judgment on the claimed violations of Nevada’s Unfair Claims Practices Act, which are unsupported by any evidence and are wholly meritless.


In its brief, concise, and easy to understand opinion the Ninth Circuit established that it does not pay to lie to an insurance company from whom you are seeking insurance. The fact that the decedent made multiple, material, misrepresentations on the application the insurer had every right to rescind. It was contumacious for Howard to sue for bad faith and appeal when he even admitted that Mark lied on the application and had no evidence to counter the testimony of the underwriter, Helberg, that established the insurer would have refused the insurance if it was told the truth. Helberg, and the insurer, were entitled to rely on the good faith of Mark when he applied and was not required to investigate the application to disprove the representations before issuing the policy.

© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. last two issues of ZIFL here. 

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