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home / study / business / operations management / operations management questions and answers / CASE ANALYSIS #2 BUSINESS LAW Rockland Trust Lent $350,000 To Peter Johnson Under A Personal ... Your question has been answered Let us know if you got a helpful answer. Rate this answer Question: CASE ANALYSIS #2 BUSINESS LAW Rockland Trust lent $350,000 to Peter Johnson under a personal loan... CASE ANALYSIS #2 BUSINESS LAW Rockland Trust lent $350,000 to Peter Johnson under a personal loan. The loan payments were to be made for sixty months. Additionally, as part of the loan agreement, Rockland required Johnson to obtain and maintain a $400,000 life insurance policy for the term of the loan and to name Rockland Trust as beneficiary. Though Johnson continued to make his loan payments, he stopped paying for the life insurance policy. Rockland paid Johnson’s monthly payment on the life insurance and added that amount to what Johnson owed. Johnson died and the life insurance company refused to pay the $400,000 life insurance policy to Rockland Trust. Rockland then sued the life insurance company. What is the probable outcome of the lawsuit? Use legal theories and the facts to support your answer. Based on the Issue identified, provide an argument for Life Insurance Company using specific facts of the case and the relevant legal theory to support it. – 10 points 4. Based on the facts given, and what you know about the legal issues involved, how would the court decide the case? In favor of Rockland Trust or the Life Insurance Company?

Answer 1

In the given case Rockland Trust lent $350,000 to Peter Johnson under a personal loan. The loan payments were to be made for sixty months. Additionally, as part of the loan agreement, Rockland required Johnson to obtain and maintain a $400,000 life insurance policy for the term of the loan and to name Rockland Trust as beneficiary.

In life insurance, the beneficiary is the person or entity entitled to receive the claim amount and other benefits upon the death of the benefactor or on the maturity of the policy. So here Rockland is the person who receives the benefit of the insurance claim in case of death of the borrower

But here, in this case, the premium amount is paying by the Rockland who is a beneficiary in this case law. As per my view premium amount shall be paid by the insured person i.e Peter Johnson. But here the premium amount against the loan cover is paying by Rockland and adding this amount to the liability of the Peter Johnson. So indirectly the liability to pay such premium amount is paying by Peter Johnson.

There is no mandatory rile prescribing that a premium amount should be paid by the person who is insured. it can be paid by any other person on behalf of the person insured. But in present days the premium amounts are being paid by way of electronic means or at the counter payment by way of cash payments.

Assuming the payments have been paid by cash. Since the amount of premium which have been paid by Rockland added to the liability of Peter then at such time Peter will get the right on the premium amount and he is the eligible payer of the premium amount.

So finally Peter paid the premium amounts and Rockland is the beneficiary. so the insurance company can not be refused to pay the claim amount to the beneficiary. So the court may decide the case in favour of the beneficiary i.e Rockland