A recent Executive Order issued by Governor Cuomo, together with recent amendments to the insurance and banking regulations (the regulations) issued by the New York State Department of Financial Services (Department), extend grace periods and give policyowners other rights under their life insurance policy or annuity contract if they can demonstrate financial hardship as a result of the novel coronavirus (COVID‑19) pandemic. These grace periods and rights are currently in effect but are temporary, though they may be extended further. Please check the Department’s websitefor updates.
The regulation also requires insurance carriers to notify their producers of the regulation’s requirements; including a servicing producer’s obligation to provide notice of the regulation to in-force clients. A copy of the Executive Order and regulations can be found here and here, respectively.
Insurance Payments - Grace Period If a policyowner can demonstrate financial hardship as a result of the COVID-19 pandemic, the insurer must extend to 90 days the applicable grace period for the payment of premiums and fees under the life insurance policy or annuity contract. If a policyowner does not make a timely premium payment and can demonstrate financial hardship as a result of the COVID-19 pandemic, the insurer may not impose any late fees relating to the premium payment or report the policyowner to a credit reporting agency or a debt collection agency regarding such premium payment.
Catching Up On Overdue Insurance Payments The regulations also require insurers to permit policyowners to pay the overdue premium over a 12-month period if they did not make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic and can still demonstrate financial hardship as a result of the COVID-19 pandemic. This also applies if the insurer sent a nonpayment cancellation notice to a policyowner prior to March 29, 2020.
How to Demonstrate Financial Hardship If a policyowner is unable to make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic, they may submit to their insurer a statement swearing or affirming in writing under penalty of perjury that they are experiencing financial hardship as a result of the COVID-19 pandemic, which the insurer shall accept as satisfactory proof. Such statement is not required to be notarized.
Notice to Policyowners The regulations also require that producers servicing inforce insurance policies or annuity contracts shall mail or provide notice of the regulations requirements to their clients. A model client notice and guidance from the department can be found here and here, respectively.
Questions If you have any questions regarding your rights under the Executive Order or regulations, please visit the New York Department’s website for additional information.