Reed

I.

FACTUAL AND PROCEDURAL

BACKGROUND

In 1988, when she was 59 years old, Priscilla Allen purchased a life insurance policy from Central Life Assurance Company. After buying the policy, Allen transferred it to the Priscilla Allen Insurance Trust, with Reed as the trustee. Through a series of transactions, the policy was acquired by various companies, eventually being held by Aviva as the insurer.

1 None of the parties were able to produce a copy of Allen’s actual policy, but Aviva produced a “specimen policy” that a company official attested included the same terms as Allen’s policy. Reed produced no evidence to the contrary. The policy was a flexible-premium, adjustable-life policy, meaning that Allen could pay more than the cost of the premium, in which case the policy’s surrender value would increase, or Allen could pay less than the cost of the premium, in which case any amount owed for the premium would be deducted from the account value, so long as it had positive balance, to keep the policy in effect. When the policy was issued in 1988, the annual premium was $17,088. As we discuss further below, the cost of the premium increased as Allen aged. By 2005, the annual…