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continued the Royal policy by payment of the premium for each
successive year.
Petitioners also discuss the fact that they were financially
unable to afford the $40,653 annual premium and that they had to
wait until Schwab's rebate check was credited to petitioner's
bank account before their equal-in-amount premium check to Royal
could be honored. In that regard, petitioners argue that their
maximum insurance coverage needs were no more than a few hundred
thousand, if they could afford it. It is irrelevant that the
insurance transaction entered into by petitioner was beyond his
needs or means. Our focus must be on the benefit or enrichment
petitioners received. Although the transaction with Royal,
through Schwab, may have been "too good to be true," petitioners
were willing to engage in the transaction because they received a
benefit. They did not become involved with Schwab out of
disinterested generosity. Instead, they willingly applied for a
$1,250,000 policy with Royal knowing that they would receive the
benefit of that coverage for a year without any cost. In order
to obtain that benefit, petitioner signed various documents, took
a physical, and made representations that he was applying for and
accepting $1,250,000 of coverage. In exchange for that
performance, petitioner received $40,653 from Schwab and/or the
benefit of $40,653 of insurance without payment. Either way,
petitioners were enriched.
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Last modified: May 25, 2011