New York Adds Life and Annuity Premium Grace Period Extension Regs

Regulation Details

In insurance, a “grace period” is a feature that helps a customer keep coverage from lapsing, even if payments are late. Many policies have built-in grace period provision.

The new New York state emergency regulations require life insurance policy and annuity contract issuers to do the following for individuals “who can demonstrate financial hardship due to COVID-19″:

• Extend the grace period for payment of premiums and fees to 90 days.
• Waive any late-payment fees during the extended grace period.
• Refrain from reporting late payments to credit rating agencies during the extended grace period.
• Let the affected customers pay any premiums that would have been due during the 90-day grace period over the course of the following year, 12 equal monthly installments.
• Give the customers 90 days to “exercise policyholder and contract holder rights and benefits under life insurance and annuity contracts.”

For group life policies and certificates, a life insurer must provide 90-day grace periods for payment of premiums and fees “for any life policyholder who demonstrates financial hardship as a result of the COVID-19 pandemic,” according to the text of the regulations.

In the regulations, the state defines “life insurer” to mean “an insurer authorized to write life insurance or annuities and an authorized fraternal benefit society.”

Officials define “life policyholder” to mean “the person to whom a life insurance policy, annuity contract, or fraternal benefit society certificate is issued, including a certificate holder under a group insurance policy or annuity contract.”

Officials do not mention products such as disability insurance or long-term care insurance, and they do not include a definition of “financial hardship.”

— Read Some States Aim to Ease Insurance Payment Deadlines, on ThinkAdvisor.

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