New York State Life Beneficiaries File Lawsuit During COVID-19 Grace Period

What do you want to know

  • The plaintiffs in the case are seeking class action status.
  • New York has given policyholders facing pandemic-related financial problems extra time to pay their premiums.
  • The insurer that purchased the coverage said it had taken steps to comply with New York’s requirements. and keep policyholders informed of changes to the grace period.

A new lawsuit could show how federal courts will handle disputes over emergency insurance rules that states have developed in response to the COVID-19 pandemic.

The plaintiffs, who are seeking class action status, are suing Northwestern Mutual Life Insurance Co, in connection with the company’s communication with a life insurance policyholder about the extension of the grace period related to the New York State pandemic.

A grace period gives the policyholder more time to pay premiums when a policy is about to expire.

Northwestern Mutual says it has taken steps to comply with New York’s grace period extension.

Lead plaintiffs Adam Drucker and Allyson Drucker claim the company notified an insured insured, Craig Drucker, of the extension without explaining that he was still eligible to use the extension.

What this means

If you’re trying to help clients with litigation related to a life insurance claim, you should keep an eye on the court news to make sure you fully understand the implications of grace period extension cases.

The case

A team of attorneys from Boonswang Law Firm, a Philadelphia firm, filed the lawsuit, Adam Drucker and Allyson Drucker, individually and on behalf of all like minded persons, against Northwestern Mutual Life Insurance Company (File Number 1:22-cv-05106)in the United States District Court for the Southern District of New York.

The main plaintiffs were the beneficiaries of a 20-year term life insurance policy taken out by a chiropractor, Craig Drucker, in 2004.

The policy had a face value of $1 million.

Linda Lacewell, former New York State Superintendent of Financial Services, implemented pandemic-related insurance rule changes on March 30, 2020. The update included provisions granting policyholders life insurance and annuity contract holders 90 days longer than normal to make the payments necessary to keep their policies and contracts in force.

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