Rescission of a Life Insurance Policy

Misrepresenting the Use Of Drugs Makes Policy Void from its Inception
Post number 5299

Posted on March 9, 2026 by Barry Zalma

In Primerica Life Insurance Company v. Rosalia Castillo Bucio, an individual; Hipolito Castillo Bucio, an individual No. 3:24-cv-01567-RBM-KSC, United States District Court, S.D. California (March 2, 2026) Primerica Life Insurance Company sued Rosalia Castillo Bucio and Hipolito Castillo Bucio, seeking to rescind a term life insurance policy issued to Gilberto Castillo.

FACTUAL BACKGROUND

. The policy, valued at $614,000, named the defendants as co-beneficiaries. Castillo submitted an application on January 15, 2020, in which he denied any history of drug or alcohol abuse in the past ten years. However, after Castillo’s death on March 28, 2021, medical records revealed that he had used methamphetamine and cocaine prior to the application date, contradicting his representations. Both defendants subsequently filed claims for the death benefit, prompting Primerica to investigate during the contestability period.

LEGAL ISSUES

The complaint relied on the principle that insurance policies may be rescinded when material misrepresentations are made in the application. California law allows an insurer to void a policy if the insured provides false, incomplete, or incorrect information that is material to the risk assumed. The application included explicit provisions requiring truth and completeness, and stated coverage could be voided if such misrepresentations were discovered within two years of issuance.

DISCUSSION

The Court found that Castillo’s answers regarding drug use were materially false. The records showed methamphetamine use for two months and daily cocaine use for over a year before the application. These facts were not disclosed to Primerica, violating the terms of the application and the policy. Castillo never corrected or updated his statements. As both co-beneficiaries submitted claims, but the misrepresentation was discovered during the contestability period, Primerica was entitled to investigate and seek rescission.

ANALYSIS

Based on the uncontested evidence and the default of the defendants, the Court determined the misrepresentations were material and justified rescinding the policy. The motion for default judgment was granted as the defendants failed to appear or respond, and the facts supported Primerica’s claim. The Court’s decision reflects the importance of truthful disclosure in insurance applications and enforcement of contestability provisions to protect insurers from fraudulent claims.

Possibility of Prejudice to Plaintiff

If Plaintiff’s Motion is not granted, it will be denied a resolution of its claim that the Policy is rescinded based on Castillo’s material misrepresentations in his Application. Thus, the potential prejudice to Plaintiff supports granting Plaintiff’s Motion.

Based on the allegations of the Complaint, Castillo’s misrepresentations in his Application regarding his use of illegal drugs, i.e. that he had not used illegal drugs during the specified time period when he had were material because Plaintiff asked the questions, and also because Plaintiff would not have issued the Policy had it known Castillo was using illegal drugs. The fact that the insurer has demanded answers to specific questions in an application for insurance is in itself usually sufficient to establish materiality as a matter of law.

Plaintiff sufficiently alleges compliance with the procedural requirements for rescission because it gave notice and returned the premiums paid for the Policy rescission requires notice of the intent to rescind and return of the value received under the contract.

Generally, default judgments are disfavored, and a case should be decided on the merits whenever possible, but where a defendant’s failure to appear makes a decision on the merits impracticable, if not impossible, entry of default judgment is warranted. The Court found entry of default judgment is proper and granted Plaintiff’s Motion for Default Judgment. The Policy (No. 0491628046) is rescinded, void ab initio, and of no legal force or effect.

ZALMA OPINION

Some people do not understand that insurance is a business of the utmost good faith requiring each party to fairly, honestly and capably tell the truth when applying for insurance. When an potential insured answers falsely to a question in an application for life insurance that he did not use illegal drugs when, in fact, he used methamphetamine and cocaine prior to the application date. Fraud in the inception of a policy requires it to be rescinded.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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