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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Kathleen M. Downing v. Country Life Insurance Company (10/9/2020) sp-7485

Kathleen M. Downing v. Country Life Insurance Company (10/9/2020) sp-7485

          Notice:  This opinion is subject to correction before publication in the PACIFIC  REPORTER.  

          Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

          303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  

          corrections@akcourts.us.  



                     THE SUPREME COURT OF THE STATE OF ALASKA                                   



KATHLEEN  M.  DOWNING,                                            )  

                                                                  )   Supreme  Court  No.  S-17557  

                              Appellant,                          )  

                                                                                                                              

                                                                  )   Superior Court No. 3AN-18-06268 CI  

          v.                                                      )  

                                                                                         

                                                                  )   O P I N I O N  

                              

COUNTRY LIFE INSURANCE                                            )  

COMPANY,                                                                                                  

                                                                  )  No. 7485 - October 9, 2020  

                                                                  )  

                              Appellee.                           )  

                                                                  )  



                                                                                                        

                    A            

                       ppeal from the Superior Court of the State of Alaska, Third  

                                                                                            

                    Judicial District, Anchorage, Eric A. Aarseth, Judge.  



                                                                                                            

                    Appearances:              Michael   J.   Schneider,   Law   Offices   of  

                                                                                                                  

                    Michael  J.  Schneider,  P.C.,  Anchorage,  for  Appellant.  

                                                                                              

                    Rebecca  J.  Hozubin,  Hozubin,  Moberly  &  Associates,  

                                             

                    Anchorage, for Appellee.  



                                                                                                          

                    Before:         Bolger,  Chief  Justice,  Winfree,  Maassen,  and  

                                  

                    Carney, Justices.  



                                       

                    CARNEY, Justice.  



I.        INTRODUCTION  



                                                                                                                                      

                    A mother appeals the superior court's grant of summary judgment to the  



                                                                                                                                

life insurance company that sold her daughter a life insurance policy.   Because the  



                                                                                                                      

superior court did not err by finding that the mother's interpretation of the insurance  



                                                                                       

policy was unreasonable, we affirm the superior court's decision.  


----------------------- Page 2-----------------------

II.             FACTS AND PROCEEDINGS               



                A.              Insurance Purchase   



                                In October 2015 Amy Downing purchased a life insurance policy from                                                                                                   



Country Life Insurance Company. She purchased both an "executive whole life" policy                                                                                                               



that would pay a flat amount of $500,000 to her beneficiaries upon her death and a                                                                                                                            



"Paid-Up Additions Rider" (PUAR) that provided an additional death benefit and an                                                                                                                          



investment opportunity.   

                                                                          1   father  Tom worked  for  Country,  another  employee,  

                                Although   Amy's                                                                                                                                       



Robert Sullivan, met with Amy and Tom to describe the terms of the policy.  During the  

                                                                                                                                                                                                          



meeting Sullivan provided Amy with a four-page policy "illustration." The first page of  

                                                                                                                                                                                                            



the illustration contained a simple chart.  The chart's first row indicated that the "Base  

                                                                                                                                                                                                  



Policy," the whole life insurance policy, had a yearly premium of $4,703 and coverage  

                                                                                                                                                                                           

of $500,000.2   The next row of the chart indicated that the "Paid-Up Additions Rider for  

                                                                                                                                                                                                          



34 years remaining" had a yearly premium of $9,320 and coverage of $1,079,014.  The  

                                                                                                                                                                                                       



second page defined relevant terms in the policy.   The third and fourth pages of the  

                                                                                                                                                                                                         



illustration demonstrated the "future policy values," showing an increasing death benefit  

                                                                                                                                                                                                 



and cash value for each year premiums were paid on the PUAR.  Amy signed page four  

                                                                                                                                                                                                       



of the policy illustration.  

                                



                                Amy asked Sullivan why she needed one and a half million dollars in  

                                                                                                                                                                                                            



insurance coverage because it was a larger benefit than she expected to need and it  

                                                                                                                                                                                                             



required higher yearly premiums.  Sullivan explained that although she might not need  

                                                                                                                                                                                                     



the large death benefit, the structure of the PUAR provided an investment opportunity  

                                                                                                        



                1               Because all family members share the same surname, we refer to them by                                                                                                     



their first names for clarity.                    



                2               All figures are rounded to the nearest dollar.  

                                                                                                                            



                                                                                                     -2-                                                                                             7485
  


----------------------- Page 3-----------------------

                                                                                                                           

because it maximized the policy's cash value.   Sullivan later testified that he never  



                                                                                                                                     

represented to Amy that the death benefit associated with the PUAR was a flat amount.  



                                                                                                                               

                    After paying the premiums for a year, Amy informed her parents that she  



                                                                                                                 

intended  to  abandon the policy and  withdraw its existing  cash value.                                         Her  mother  



                                                                                                                             

Kathleen decided to look into the policy as an investment. Tom provided a revised copy  



                                                                                                                               

of Amy's policy illustration to Kathleen to help her decide whether to take over the  



                                                                                                                          

policy; Kathleen focused "on the part of the document that showed how rapidly 'Total  



                                            

Cash Value' increased over time."  



                                                                                                                              

                    Kathleen decided to take over payment of the premiums on Amy's life  



                                                                                                                            

insurance policy, including the PUAR, as an investment.  With Tom's assistance, Amy  



                                                                                                                         

assigned her policy to Kathleen on September 22, 2016.  After Amy signed the change  



                                                                                           

in ownership form, Kathleen also signed the revised policy illustration.  



                                                                                                                              

                    Four months later, on January 27, 2017, Amy died in an accident.  Her  



                                                                                                                         

death occurred in the second year of her policy coverage. Country paid the death benefit  



                                                                                                                                     

of $500,000 on Amy's whole life policy. Country also paid $108,855 on Amy's PUAR.  



                                                                                                                               

Kathleen sued, alleging that she was entitled to $1,095,741 on Amy's PUAR, minus the  



                            

$108,855 already paid.  



                                

          B.        Policy Terms  



                                                                                                                      

                    A whole life insurance policy and a rider like the PUAR serve different  



                                                                                                              

purposes for the policyholder. A whole life insurance policy provides the policyholder's  



                                                                                                                              

beneficiaries  with  a  guaranteed  payout  to  cushion  the  economic  effects  of  the  



                                                                                                                               

policyholder's death.  The policyholder pays a yearly premium and, upon her death, the  



                                                                                             

insurance company pays a flat amount to the policyholder's beneficiaries.  



                                                                                                                                 

                    On the other hand, the PUAR is primarily intended to provide benefits to  



                                                                                                                             

the policyholder during the policyholder's life.  It is marketed to individuals with high  



                                                                                                                              

incomes as an investment that provides tax-free growth. The policyholder is free to stop  



                                                               -3-                                                         7485
  


----------------------- Page 4-----------------------

                                                                                                                                                                                            3  

paying the PUAR premiums and withdraw the policy's current "cash value" at any time.                                                                                                            



                                                                                                                                                                           

In addition to the increasing cash value, the PUAR has a death benefit which similarly  



                                                                                                               

grows each year the policyholder pays the PUAR premiums.  



                                                                                                                                                       

                             Amy's PUAR was "attached to and made a part of the policy" and stated  



                                                                                                                                                                                        

that "[w]here there is a conflict between this Rider and the Policy, the provisions of the  



                                                                                                                                                           

Rider will control." Under the heading "AMOUNTOF PAID-UP LIFE INSURANCE,"  



                         

the PUAR provided:  



                                                                                                                                                          

                             The amount of Paid-Up life insurance is the amount the net  

                                                                                                                                           

                             premium  will  purchase  when  applied  at  the  Insured's  

                                                                                                                                             

                             Attained Age and sex on the date of purchase.  Net premium  

                                                                                                                                              

                             is the rider premium paid less an expense load. The purchase  

                                                                                                       [4]  Age Last Birthday, sex  

                                                                                                                                                         

                                                                                            

                             price is based on the 2001 CSO 

                             distinct,  smoker/nonsmoker,  ultimate  mortality  table  and  

                                                                                                                                                        

                             4.00% Interest.[5]  

                                             



The PUAR calculated the "cash value" of the policy as the sum of the amount of paid-up  

                                                                                                                                                                              



life insurance as described above plus the value of any dividends or dividend deposits  

                                                                                                                           



associated with the PUAR.  

                                            



               3             Amy's policy defined "Cash Value" as: "The amount of money . . . that the                                                                                  



Owner will receive if the Owner allows the Policy to Lapse or cancels the coverage and                                                                                                 

surrenders the Policy to the Company." The policy defined "Paid-Up" to mean "that no                                                                                                     

further premium payments are required for the insurance coverage or benefit."  It also                                                                     

defined "Paid-Up Additions" as:                                           "Additional life insurance on the life of the Insured                                              

purchased   with   dividends   paid   under   this   Policy.     Paid-Up   Additions   increase   the  

Policy's total death benefit and Cash Value, and require no additional premiums after                                                                                               

being purchased."   



               4             CSOstandsfor"CommissionersStandardOrdinary,"which is themortality  

                                                                                                                                                                           

table designated by the insurance commissioner.  

                                                                           



               5             The result of this calculation is found in both the policy illustrations signed  

                                                                                                                                                                                

by Amy and Kathleen and the chart on "page two" of the policy.  

                                                                                                                               



                                                                                            -4-                                                                                    7485
  


----------------------- Page 5-----------------------

                                                      Under theheading"TERMINATIONOFTHEAGREEMENT,"thePUAR                                                                                                                                                                                                                         



 stated that it would terminate when any of the following events occurred: "(1) When the                                                                                                                                                                                                                                                        



Policy terminates; (2) The date this Rider is surrendered for its cash value; (3) The date                                                                                                                                                                                                                                                 



a Nonforfeiture Option under the Policy becomes effective; or (4) Upon written request                                                                                                                                                                                                                                        



to terminate this Rider."                                          



                                                      The PUAR further stated that "[t]he death benefit amount for this Rider . . .                                                                                                                                                                                                                  



is shown on the Policy Specifications" of the insurance policy.                                                                                                                                                                                                    The policy's table of                                                           



contents lists pages one and two as the "policy specifications."                                                                                                                                                                                              The header on the first                                                      



page of the policy is "Policy Specifications."  It states that the "death benefit amount"  

                                                  6       It also documents that Amy was a 31-year-old female non-smoker.  The  

is $500,000.                                                                                                                                                                                                                                                                                                                              



first page of the policy displays a chart, reproduced in relevant part below:  

                                                                                                                                                                                                                                                                                



                                                                              Benefit                                                                                                        Amount                                                      Annual                                                Years  

                                                                                                                                                                                                                                                         Premium                                               Payable  



     ICC13  (WL)                                                               Basic  Policy                                                                                                                                                             $4,570                                                64  



     DWP260                                                                   Disability  Waiver  of                                                                                                                                                     $130                                                  29  

     (AKAZ13)                                                                  Premium  



     ICC13  (PUAR)                                                             Paid-Up  Additions  Rider                                                                                     $1,095,741                                                  $9,320                                               34  



 Sullivan  testified  that  the  first  page  illustrated  "a  level  premium  paid-up  additions  rider  



that  was  .  .  .  applicable  for  34  years,  which  would  have  been  through  age  65  .  .  .  simply  



to  coincide  with  most  people's  perception  of  [a]  retirement  age"  of  65.  



                                                      The  first page  is  followed  by  an  intentionally  blank  page.   The  next  two  



pages   contain   a   continuous   chart   on   pages   numbered   "PAGE   2"   and   "PAGE   2  



                           6                          Amy's policy defines "Death Benefit Amount" as:  "The amount used to   



calculate the Proceeds that are payable upon the death of the Insured. The Death Benefit                                                                                                                                                                                                                                       

Amount does not include adjustments for . . . paid-up additions . . . or other additional                                                                                                                                                                               

benefits or riders."                         



                                                                                                                                                                         -5-                                                                                                                                                            7485
  


----------------------- Page 6-----------------------

                               7  

CONTINUED."     The   chart   is   entitled   "TABLE   OF   GUARANTEED   POLICY  



VALUES FOR ENTIRE CONTRACT." The chart is arranged by policy year: each row                                                                                  



displays a successive year of paid policy premiums, Amy's projected age, the guaranteed                                                         



cash value of the policy, and the guaranteed amount of paid-up insurance.                                                                    Select rows   



from the chart follow:       



  End  of  Policy  Year                    Attained  Age                            Tabular  Cash  or                        Paid-Up  Insurance  

                                                                                    Loan  Value  



   1                                       32                                       $8,788                                   $52,864  



  2                                        33                                       $17,895                                  $103,879  



  5                                        36                                       $54,566                                  $284,838  



   10                                      41                                       $130,383                                 $571,206  



  34                                       65                                       $699,351                                 $1,434,126  



  50                                       81                                       $1,085,732                               $1,511,509  



  90                                        121                                     $1,579,014                               $1,579,014  



                                                                                                                                                        

Thus, if Amy continued to pay yearly premiums, by the second policy year, she would  



                                                                                                                                                             

have a guaranteed cash value of $17,895 as well as $103,879 in paid-up insurance.  The  



                                                                                                                                                   

bottom of each page also lists a "death benefit amount" of $500,000 - the coverage  



                                      

from the whole life policy.  



             C.          Proceedings  



                                                                                                                                                                 

                         In April 2018, Kathleen filed a complaint alleging that she was entitled to  



                                                                                                                                                     

$1,095,741 from the PUAR instead of the $108,855 paid by Country. Kathleen asserted  



that page one of Amy's policy clearly stated that she was entitled to a death benefit of  



                                                                                                                                                             

$1,095,741 from the PUAR. Country filed an answer and counterclaim, responding that  



             7  

                                                                                                                                                           

                         The pages are numbered in this way due to a regulation requiring this chart  

                                                    

to be on "page two" of the policy.  



                                                                               -6-                                                                              7485  


----------------------- Page 7-----------------------

                                                                                                                                 

the policy's table of guaranteed values showed that the guaranteed paid-up insurance in  



                                                                                                                               

the second policy year was "no less than $103,879" and that both Amy and Kathleen had  



                                                                                                                     

signed illustrations "showing similar guaranteed values."  Country asserted that it had  



                                                                         

"paid out all benefits that were due to Kathleen Downing."  



                                                                                                                 

                    Kathleenmovedforsummaryjudgment;Countryopposedand cross-moved  



                                                                                                                               

for summary judgment.   The superior court heard oral argument and ruled from the  



                                       

bench at the close of the hearing.  



                                                                                                                                 

                    The court granted summary judgment to Country.  It found that "there is  



                                                                                                                              

only one reasonable interpretation" of the policy and rejected Kathleen's argument that  



                                                                                                                            

the policy's terms were defined exclusively on the first page. The court found that there  



                                                                                                                   

was "never a representation . . . in any of these documents that there [was] only going  



                                                                                                                              

to be one page" of the contract.  It acknowledged that if it limited its review to the first  



                                                                                                                            

page of the policy, it would rule in Kathleen's favor.  But it looked at the policy's table  



                                                                                                          

of contents, which indicated that there were multiple pages of policy specifications.  



                                                                                                                                

                    Thecourt rejected Kathleen'sargument thatpolicy languageexplaining the  



                                                                                                                       

calculation of paid-up life insurance was unintelligible, instead finding that if an  



                                                                                                       

                    objective, reasonable person . . . takes the time . . . that might  

                                                                                        

                    be necessary for them to understand it . . . that this is the  

                                                                                                          

                    formula that is dependent primarily on two things:  time and  

                                                                                                          

                    the amount of premiums paid.  It is pretty clear in here that  

                                                                                                         

                    the amount of premiums paid is an important part of how  

                    you're going to calculate this number, which means that, as  

                                                                                               

                    it progresses over time, it is going to increase in value.  It is  

                                                                                                    

                    not a flat rate.   There's something that is going to happen  

                                                                      

                    over time in terms of that value increasing.  



                                                                                                                              

The court agreed that a person "may not be able to understand the precise math when you  



                                                                                                                           

add in the age and the gender and the smoking and all those other little factors in terms  



                                                                                                                                 

of the matrix."  But the court found that it was clear that the "benefit [was] going to  



                                                               -7-                                                         7485
  


----------------------- Page 8-----------------------

 continue up to a certain age, and so it's an investment" and that the policyholder would                                                                                                                                                                                                                                                                                            



 pay premiums of approximately $9,000 until retirement age, at which point the death                                                                                                                                                                                                                                                                                                    



 benefit would be approximately $1,500,000. And the court noted the parties' agreement                                                                                                                                                                                                                                                                            



 that Sullivan and Amy had "a dialogue" about this growing benefit and that Amy had an                                                                                                                                                                                                                                                                                                                  



 opportunity to have all of her questions answered.                                                                                                                                       



                                                               The court concluded that while the contract "takes a little bit of time" to                                                                                                                                                                                                                                                              



 fully understand, there was ultimately only one way to interpret it. It found the PUAR's                                                                                                                                                                                                                                                                                  



 definition of the "Amount of Paid-Up Life Insurance" set forth the calculation of the                                                                                                                                                                                                                                                                                                             



 death benefit, which was based on time and premiums paid, and resulted in an increasing                                                                                                                                                                                                                                                                           



 value over time as yearly premiums were paid. And it found that the PUAR directed the                                                                                                                                                                                                                                                                                                              



 policyholder   to   the   policy   specification,   which   contained   a   chart   on   page   two   that  



 illustrated how the amount of paid-up life insurance increased each year.                                                                                                                                                                                                                                                  



                                                               The court then granted Country's cross-motion for summary judgment.                                                                                                                                                                                                                                                                       It  



 later issued a written final judgment denying Kathleen's motion for summary judgment                                                                                                                                                                                                                                                                                 



 andgrantingCountry's                                                                                     cross-motion for summary                                                                                                   judgment, "establishingthat[Country]                                                                                             



 owes nothing further under its life insurance policy."                                                                                                                                                          



                                                               Kathleen appeals.   



 III.                           STANDARD OF REVIEW                                                                    

                                                                                                                                                                                                                                                                                                           8   "Summary judgment  

                                                               "We review grants of summary judgment de novo."                                                                                                                                                                                                                                                         



 is proper if there is no genuine factual dispute and the  moving party is entitled to  

                                                                                                                                                                                                                                                                                                                                                                                                       

judgment as a matter of law."9                                                                                                                                 "We also review de novo as a question of law the  

                                                                                                                                                                                                                                                                                                                                                                                                  



                                8                               Christensen v. Alaska Sales &Serv., Inc.                                                                                                                                               , 335 P.3d514,516 (Alaska 2014).                                                                                              



                                9  

                                                                                                                                                                                                                                                                                                

                                                              Mitchell v. Teck Cominco Alaska Inc., 193 P.3d 751, 757 (Alaska 2008).  

                                                                                                                                                                                                                                                                                           

 Kathleen concedes that this case "presents questions of pure law."  



                                                                                                                                                                                                    -8-                                                                                                                                                                                     7485
  


----------------------- Page 9-----------------------

                                                                                         10  

interpretation of insurance policy language."                                                 "In addressing the proper interpretation            



of an insurance policy, we look to '(1) the language of the disputed provisions in the                                                                                



policy,   (2)   other   provisions  in  the policy,                                      (3)   extrinsic   evidence,   and   (4)   case   law  

interpreting similar provisions.' "                               11  



IV.          DISCUSSION  



                           Because "we treat insurancepolicies as contractsofadhesion," we construe  

                                                                                                                                                            



such policies "so as to provide that coverage which a layperson would have reasonably  

                                                                                                                                                       

expected  from  a  lay  interpretation  of  the  policy  terms."12  

                                                                                                                                                                       

                                                                                                                             Under  this  doctrine  of  



                                                                                                                                                

reasonable  expectations,  the  policyholder's  "objectively  reasonable  expectations"  



                                                                                                                                                 

govern, even if "painstaking study of the policy provisions would have negated those  



                            13 

                                                                                                                                                  

expectations."                   "We interpret ambiguous insurance policies in favor of the purported  

                  14     But it is also well-established that "the mere fact that two parties to an  

insured."                                                                                                                                                              



insurancecontracthavediffering subjectiveinterpretationsofthatcontractdoesnot make  

                                                                                                                                                                  



             10            State Farm            Mut. Auto. Ins. Co.                   v. Dowdy          , 192 P.3d 994, 998 (Alaska 2008).                     



             11            State   Farm   Mut.   Auto.   Ins.   Co.   v.   Houle,    269    P.3d    654,    657-58  



(Alaska 2011) (quoting                          Allstate Ins. Co. v. Teel                      , 100 P.3d 2, 4 (Alaska 2004)).                



             12            U.S. Fire Ins. Co. v. Colver, 600 P.2d 1, 3 (Alaska 1979); see also Teel, 100  

                                                                                                                                                                      

P.3d at 4 ("We construe grants of [insurance] coverage broadly and interpret exclusions  

                                                                                                                                                        

narrowly.").  



             13            Teel, 100 P.3d at 4 (quoting C.P. ex rel. M.L. v. Allstate Ins. Co., 996 P.2d  

                                                                                                                                                                    

 1216, 1222 (Alaska 2000)); accord Hahn v. GEICO Choice Ins. Co., 420 P.3d 1160,  

                                                                                                                                                                 

 1170-71 (Alaska 2018).  

                                    



             14           Dugan v. Atlanta Cas. Cos., 113 P.3d 652, 655 (Alaska 2005).  

                                                                                                                                           



                                                                                   -9-                                                                            7485
  


----------------------- Page 10-----------------------

                              15  

it ambiguous."                    "Rather, ambiguity exists 'only when the contract, taken as a whole,                                                        

is  reasonably  subject to differing interpretations.' "                                             16  



                           Kathleen argues, primarily based upon her position that the first page alone  

                                                                                                                                                                 



defines the contract's terms, that Amy had a reasonable expectation that the PUAR had  

                                                                                                                                                                     



a  flat  death  benefit  of  $1,095,741.                                    She  argues  that  the  first  page  was  "of  pivotal  

                                                                                                                                                             



importance"  to  Amy's,  and  then  her  own,  reasonable  understanding  of  the  benefit  

                                                                                                                                                             



amount.  She makes a number of subsidiary arguments about the reasonableness of her  

                                                                                                                                                                     

expectations.17  

                               



                           Kathleen acknowledges that the PUAR states that the death benefit amount  

                                                                                                                                                             



of the PUAR can be found in the "Policy Specifications."  She points to the first page of  

                                                                                                                                                                        



the policy, entitled "Policy Specifications," which contains a chart that appears to show  

                                                                                                                                                                 



$1,095,741 as the PUAR benefit amount.  Kathleen then argues that because the next  

                                                                                                                                                                   



page of the policy is intentionally left blank, it is intended to "signal[] to the insured that  

                                                                                                                                                                     



he or she need look no further for information."  Kathleen urges us to "stop right here  

                                                              



in [the] analysis" because thefirst pageofthe policy "flatly, singularly, and unqualifiedly  

                                                                                                                                                  



declares its death-benefit 'AMOUNT' to be $1,095,741."  

                                                                                         



             15           Id.  



             16           Id.  (emphasis in original) (quoting                                   Colver, 600 P.2d at 3);                       see also State     



Farm Mut. Auto. Ins. Co. v. Dowdy                                     , 192 P.3d 994, 998 (Alaska 2008) ("[A]mbiguities                     

only exist when there are two or more reasonable interpretations of particular policy                                                                          

language.").  



             17            Kathleen additionally asserts that there is an ambiguity between the terms  

                                                                                                                                                                 

on the first page of the policy (showing a benefit of $1,095,741) and the terms on the  

                                                                                                                                                                     

second page of the policy (showing a variable benefit) that should be resolved in her  

                                                                                                                                             

favor, and that the variable death benefit associated with the PUAR "contains unfairly  

surprising  or  unusual  terms  [that]  must  be  disclosed  with  sufficient  clarity  and  

                                                                                                                                                                   

conspicuosity."  



                                                                                  -10-                                                                           7485
  


----------------------- Page 11-----------------------

                                   We agree with Kathleen that the first page of the policy is misleading. But,                                                                                                         



like the superior court, we decline her invitation to ignore other pages of the policy, the                                                                                                                                



policy illustrations that both she and Amy signed, and Sullivan's explanation of the                                                                                                                                       

policy terms to Amy.                                    18  



                                   Terms of an insurance contract must be interpreted as a whole, not simply  

                                                                                                                                                                                                                  

by  the  policy's  first  page.19                                                    The  PUAR  directs  the  policyholder  to  the  "policy  

                                                                                                                                                                                                              



specifications." The policy's table of contents indicates that the specifications are found  

                                                                                                                                                                                                                    



on pages one and two of the policy,  even though only the first page includes the words  

                                                                                                                                                                                                                   



"policy specifications."   The chart on page two is not "buried" in the document, as  

                                                                                                                                                                                                                             



Kathleen suggests, but is on the very next page. And although the formula that generates  

                                                                                                                                                                                                           



the amount of paid-up insurance is complex, the chart on page two provides a clear  

                                                                                                                                                                                                                      



demonstration of the formula's projected annual results in a format understandable by  

                                                         



a layperson.  It shows the guaranteed cash value and the guaranteed amount of paid-up  

                                                                                                                                                                                                               



insurance for each year the PUAR premiums are paid.  

                                                                                                                                  



                                   A version of this chart was also provided to Amy as an "illustration" and  

                                                                                                                                                                                                                          



a visual guide when Sullivan explained the PUARto her before she purchased the policy.  

                                                                                                                                                                                                                                      



Amy signed a policy illustration when she bought the policy.  And Kathleen signed a  

                                                                                                                                                                                                                                



similar illustration provided by Tom when she took over the policy.  The chart in the  

                                                                                                                                                                                                                           



policy and the illustrations that both Amy and Kathleen signed make clear that the cash  

                                                                                                                                                                                                                        



                  18               Cf. Dugan                  , 113 P.3d at 655 (recognizing that even when contract "drafting                                                                              



is sloppy and careless," if "reasonable interpretation favors the insurer, and any other                                                                                                                              

would be strained and tenuous, no compulsion exists to torture or twist the language of                                                                                                                                       

the   contract"   (quoting   Ness   v.   Nat'l   Indem.   Co.   of   Neb.,   247   F.   Supp.   944,   947  

(D.  Alaska 1965))).   



                  19               See id.; see also Hahn v. GEICO Choice Ins. Co., 420 P.3d 1171, 1170-71  

                                                                                                                                                                                                              

(Alaska 2018) (recognizing that courts cannot "consider a single [contract] term in  

                                                                                                                                                                                                                             

isolation").  



                                                                                                            -11-                                                                                                      7485
  


----------------------- Page 12-----------------------

value and amount of paid-up insurance provided by the terms of the PUAR change over                                                                                                 



           20  

time.                                                                                                                                                                        

                   Kathleen  herself  conceded  that  the  rapid  increase  in  "Total  Cash  Value"  



                                                                                                                                                                       

displayed in the policy illustration was a major reason she took over Amy's policy.  



                                                                                                                                                                 

                             The PUAR makes clear that, unlike the whole life policy to which it was  



                                                                                                                                                                              

attached, the policyholder may stop paying PUAR premiums and withdraw the current  



                                                                               

cash value at any time.  The PUAR states that it can be terminated if it is "surrendered  



                                                                                                                                                                                

for its cash value." Kathleen admitted that Amy was aware of this: she stated that before  



                                                                                                        

she took over payment of the premiums "Amy intended to withdraw the policy's cash  



                                                                                                                                                                                  

value and abandon the policy."  This feature of the PUAR simply would not make sense  

                                                                                                                                                        21   Instead, as the  

                                                                                                                                                                                       

if it operated like a whole life policy and conferred a flat death benefit. 



PUAR makes clear and both Kathleen and Amy seemed to understand, payment of a  

                                                                                                                                                                                           



yearly premium increased the value of the policy, and the policyholder could, at any  

                                                                                                                                                                                     



point, terminate the policy and withdraw its current cash value.  Because the PUAR is  

                                                                                                  



clear that, unlike whole life insurance, it has a value that increases over time, it would  

                                                                                                                              



be unreasonable for a policyholder to believe that the PUAR conferred a flat death  

                                                                                                                                                                                 

benefit of over one million dollars in its second year.22  

                                                                                                         



               20            We agree with Kathleen that the illustrations do not "control" the terms of                                                                                 



the PUAR, but we disagree that the illustrations "do little to clarify" the policyholder's                                                                    

reasonable expectations of the policy terms. The illustrations provide valuable evidence                                                                                  

about whether a layperson could reasonably believe that the PUAR had a flat death                                                                                                

benefit.  



               21            Kathleen's  argument  that  the  definition  of  "paid-up"  supports  her  

                                                                                                                                                                                    

reasonable expectation that she would receive a death benefit of over one million dollars  

                                                                                                                                                                               

once again depends upon her position - which we have rejected - that the first page  

                                                                                                                                                                                   

of the policy is the only relevant page.  The policy's definition on its page four does not  

                                                                                                                                                                                       

support her argument.  See supra note 3.  

                                                                                     



               22            Kathleen makes several arguments that the PUAR was sold as "whole life  

                                                                                                                                                                                      

                                                                                                                                                                (continued...)  



                                                                                          -12-                                                                                    7485
  


----------------------- Page 13-----------------------

                                              In   addition   to   the   PUAR   itself   and   the   chart,   Kathleen   admitted   that  



 Sullivan described the policy to Amy and Amy had an opportunity to ask questions.                                                                                                                                                                                                                          



 Sullivan testified that he never represented the PUAR as having a flat benefit and that he                                                                                                                                                                                                      



explained to Amy that the PUAR maximizes the cash value of the policy over time.                                                                                                                                                                                                                            



                                              Even though the policy is a contract of adhesion, after taking into account                                                                                                                                                     



the terms of the PUAR, the table of guaranteed values in the policy, the illustrations                                                                                                                                                                         



provided to Amy and Kathleen, and Sullivan's conversation with Amy, a policyholder                                                                                                                                                                        



could not have an objectively reasonable expectation that the PUAR would pay a flat                                                                                                                                                                                                       



death benefit of $1,095,741 in the second year of the policy.                                                                                                                          



V.                     CONCLUSION  



                                              We therefore AFFIRM the superior court's summary judgment order.  

                                                                                                                                                                                                                                                                         



                       22                     (...continued)  



                                                                                                                                                                                                                                                                                 

insurance" and should have operated as a whole life policy does, with a flat death benefit  

                                                                                                                                                                                                                                                                                                     

amount.  But the PUAR was not sold as a whole life policy:  it was sold as a rider on a  

                                                                                                                                                                                                                                                                                                  

whole life policy.  The policies are structured differently to provide different benefits to  

                                                                                                                                                                                                                                                                                              

the policyholder, and it is thus not reasonable to assume that the PUAR would have the  

                                                                                                        

same structure as a whole life policy.  



                                                                                                                                              -13-                                                                                                                                      7485
  

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