Also known as: proceeds & avails · insurance proceeds · policy avails
Written by attorneys · grounded in primary & secondary sources — see below
The cash-surrender value of a life-insurance policy together with values built up since the policy's issue date and the benefits payable on maturity and at the death of the insured. These amounts represent the economic value available to the policy owner or beneficiaries upon surrender, maturity, or the insured's death.
Pierce Patterson contracted to buy a home from Prosperity Investments. Before closing a fire destroyed the house. Under the majority rule on risk of loss the buyer bore the risk after contract formation. Pierce could not rescind but received the insurance proceeds and avails allocated to him as equitable owner.
Peter Park's former spouse remained the listed beneficiary on his ERISA-governed life policy after divorce. The court held federal law preempted the state automatic-revocation statute. The ex-spouse collected the proceeds and avails despite the divorce.
Select any source to read its text and confirm it supports the definition.
Mortgagee held a first mortgage on Blackacre. After a fire reduced value, the insurer tendered proceeds. Mortgagee recovered the amount needed to restore the loan-to-value ratio from the insurance proceeds and avails under ordinary priority rules.
Priscilla Parks sought division of the cash-surrender value of her husband's life insurance in dissolution proceedings. The court treated the proceeds and avails as marital property subject to equitable distribution. She received a portion of the accumulated value.
Pedro Pacheco's ex-wife claimed the proceeds and avails of his life insurance after his death. The court examined whether the policy designation survived divorce under federal preemption rules. The ex-wife received the benefits because the plan documents controlled over state revocation statutes.
Phuong Pham recovered proceeds and avails from a manufacturer's liability policy after a defective product caused injury. The court applied the risk-utility test to determine defect. The insurer paid the policy limits directly to the injured claimant as the proceeds and avails of the coverage.
The term includes the cash-surrender value, accumulated values since issuance, and benefits payable at maturity or the insured's death. These amounts are the economic interests available to the owner or beneficiaries.
Supporting sources
Under the majority rule the buyer bears the risk after contract formation and may not rescind merely because improvements are destroyed. The seller holds title as trustee and insurance proceeds may be allocated by contract or equitable principles to the buyer.
A mortgagee may recover from the proceeds to the extent necessary to restore the loan-to-value ratio or satisfy the debt when the mortgage requires the mortgagor to insure and name the mortgagee as loss payee. The mortgagee's rights are governed by ordinary priority rules.
Yes. ERISA preempts state statutes that automatically revoke a spouse's beneficiary status upon divorce when the policy is governed by ERISA. The plan documents control and the former spouse may still receive the proceeds and avails.
…Dissenting — Justice Ginsburg Responding to Holocaust victims' and their descendents' long-frustrated efforts to collect unpaid insurance proceeds, California's Holocaust Victim Insurance Relief Act of 1999 (HVIRA), Cal. Ins. Code Ann. § 13800 et seq. (West Cum. Supp. 2003), requires insurance companies operating in the State to…