Farmers denied Nebraska mom her husband's $350K life policy, offered $17,360 instead. A jury awarded her $11.3M

The couple had a $350,000 life insurance policy that covered Gaytan’s death and had paid $17,360 into the policy before he passed away at 55, according to The Nebraska Examiner.

Ramos filed the claim, but Farmers rejected it, noting that Gaytan had a history of heart disease. The insurer claimed the family didn’t disclose it in the policy application.

The heart attack was disclosed

Gaytan did suffer a heart attack a few months before signing the life insurance policy. Still, Ramos’ legal team argued that the insurance agent who approached Gaytan was aware of his heart condition and that it was disclosed, including his prescription medication, on the policy application. Farmers also ran a medical history test included in the application, and the company knew the results.

When Farmers rejected the $350,000 policy payment request and only offered to cover the $17,360 paid into the account, Ramos opted not to cash the check and subsequently sued the insurer in March 2022, in Douglas County, Nebraska, district court.

Now, in two separate cases, and after an initial district court ruling in Farmers’ favor, a successful appeal saw jury verdicts backing Ramos and supporting her original claim for the $350,000 Farmers owed in early 2026. Later on, a jury in a second case awarded her $11.3 million in damages on October 16, based on breach of contract.

“It was really difficult,” Ramos told The Examiner. “Physically and emotionally, we’re now more stable.”

Moneywise has reached out to Farmers for a comment, but has not heard back

Clearing the air on health issues and life insurance policies

While the dust settles from the Ramos-Farmers case, insurance customers may wonder where the burden of proof lies in alleged misrepresentation in life insurance policies.

“When an insurance company in Nebraska claims misrepresentation, the onus is on the insurer,” Roger Diefendorf, an attorney at Forum & Lex, P.C. in San Francisco and a former California Administrative Law Judge, told Moneywise. “A false statement made on an application will not render a policy invalid if it did not deceive the insurer to its detriment. The court has interpreted this to mean that the insurer must show the person knew they were deceiving the company.’

According to Diefendorf, a jury can infer intent from a false answer, but it doesn’t have to, as happened in Ramos, when the jury rejected Farmers’ misrepresentation defense.

“Most people don’t know this, but the misrepresentation doesn’t have to relate to how the person died, as long as the insurer would not have issued the policy had it known the truth,” Diefendorf noted. “In this case, his heart attack would be relevant even though he passed away from Covid-19.”

However, the same life application can also work against the insurer, because it can only rely on the answers if nothing in them put it on notice that something was wrong.

After years of reviewing medical files as a judge, Diefendorf said one issue he noticed in the Ramos case was that during his paramedical exam, Gaytan told the examiner that he was taking lisinopril for high cholesterol.

“Lisinopril is used for high blood pressure, heart failure, and after a heart attack; it is not used to lower cholesterol,” he stated, “I would think that would prompt an insurance company to inquire why someone is on this medication prior to issuing a policy, not after someone has passed away.”

Responsibilities of insurance agents

From an insurance company’s point of view, potential breach-of-contract and bad-faith issues can go off the rails when an agent engages with a customer about a policy and avoids getting key information.

“When an agent sits at someone’s kitchen table and fills out that application, the family is trusting that what gets said in that room is what reaches the underwriter,” Weston Shirey, a licensed life insurance broker and benefits coordinator at North American Senior Benefits in Nashville, Tennessee, told Moneywise. “If the agent knew about a health condition and didn’t write it down, that is not the family’s failure. Carriers recruit, train and appoint their agents, and they should own their agents’ errors.”

What protects a consumer is being transparent with insurance agents.

“Answer every health question completely and honestly, keep a copy of the signed application, read the policy when it arrives during the free-look period, and never let an agent talk you out of disclosing something because ‘it probably doesn’t matter,” Shirey said.

Avoid these life insurance documentation mistakes

Too often, life insurance policyholders make unforced errors that can come back to haunt them and their families.