Biltoft v. Wootten

Opinion

MORRIS, J.

The decedent, Wendell Edward Biltoft, had a Federal Employees’ Group Life Insurance (FEGLI) policy. This appeal involves a contest between the wife and the daughter of the decedent over the proceeds of the FEGLI policy.

Facts

During the marriage of the decedent and the wife, the decedent was employed by the federal government. The decedent therefore became eligible for coverage under the Federal Employees’ Group Life Insurance program. The premiums on the insurance were paid by biweekly deductions from decedent’s pay. The FEGLI policy was a term insurance policy with no cash surrender value and no accumulation of dividends.

[60]

The wife and the decedent were separated on March 20, 1976. The wife filed an action for dissolution shortly thereafter. After the wife and the decedent were separated, the decedent changed the beneficiary designation on the FEGLI policy from the wife to his daughter and his son. In November of 1976, the decedent died. The wife claims that a portion of the proceeds is community property because community property was used to pay the premiums. The daughter contends that the entire proceeds were separate property because at the time of death, the premiums had been paid with the decedent’s separate property earnings.

Discussion

The daughter’s argument is premised on the view that term insurance only provides insurance for each premium period and that therefore each premium payment is a new contract and purchases a new policy of insurance.

This view was summarily rejected in

Modern Woodmen of America

v.

Gray

(1931) 113 Cal.App. 729 [299 P. 754]. The salient facts in that case were: The husband was issued a term life insurance certificate which named his first wife as beneficiary. The husband later attempted to change the beneficiaiy designation to his second wife. The attempted nomination of the second wife as beneficiary failed for procedural reasons. Nevertheless, the second wife argued that each quarterly premium constituted a new contract of insurance. She claimed that the entire policy was community property since the last four quarterly premiums were paid with community property.