In Sun Life Assur. Co. of
Canada v. U.S. Bank Nat. Ass'n, the Eleventh Circuit
recently clarified that where a life insurance policy lacks an
insurable interest at its inception and is thus void ab
initio, prejudgment interest accrues from the date of
payment.
The case involved a $5
million life insurance policy issued in 2006 on a woman in her
mid-seventies. Two years later, U.S. Bank purchased the policy from
the policy's funder and made premium payments on it until the
insured's death in 2014. After U.S. Bank made a claim for
benefits, Sun Life refused to pay, alleging that the policy
constituted a "stranger originated life insurance"
(STOLI) policy. Sun Life sought an order declaring the policy void
ab initio, and U.S. Bank filed counterclaims seeking a
return of all premium payments made pursuant to the policy. The
District Court for the Southern District of Florida entered a
judgment in favor of Sun Life as to its declaratory judgment claims
and in favor of
