Class Action Claims New York Life Failed to Send Mandatory Forms and Notices, Caused Policies to Lapse

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A proposed class action alleges New York Life Insurance Company has knowingly and repeatedly violated California law by failing to provide mandatory forms and annual notices to policyholders, which has caused some policies to improperly lapse and led to New York Life’s refusal to pay life insurance benefits. 

The 25-page case, filed on September 28, alleges New York Life has run afoul of the California Insurance Code, which requires life insurance companies to, among other things, give policyholders an opportunity to designate a third party to receive notice of a potential termination of benefits for non-payment and notify the policyholder annually of their right to designate one or more persons or change the written designation. 

According to the complaint, New York Life has failed to satisfy California law as it pertains to policies issued before January 1, 2013. The filing alleges New York Life has instead sent “plainly deficient and ambiguous” notices within other lengthy, unrelated policy materials that failed to conspicuously and unambiguously advise policyholders of their rights. 

“This purported notice made it nearly impossible for policyholders to exercise their important statutory rights that the Statutes were enacted to protect,” the complaint claims, stressing that the California Insurance Code aims to provide consumers, and especially seniors, with safeguards to protect them from losing life insurance coverage due to payments that may have accidentally been missed. 

The lawsuit highlights that it is not uncommon for a life insurance policyholder who is ill, or possibly in the final stages of life, to miss a premium payment due to poor health. The law was written to ensure both that policyholders are given sufficient warning that their premium may lapse and that a policy remains in force even if premiums are unpaid, according to the case.  

In that light, the lawsuit claims New York Life has also “repeatedly and intentionally” failed to honor life insurance policies by refusing to pay the proceeds of such to beneficiaries. The suit calls New York Life’s alleged conduct “particularly egregious and unreasonable” given the company has had notice that numerous district courts in the Ninth Circuit have enforced the California Insurance Code against life insurance companies in nearly identical circumstances, and that the California Supreme Court has agreed. 

Per the case, the plaintiff is “one of many beneficiaries” who have been damaged by New York Life’s conduct, as the company allegedly terminated improperly and refused to pay the benefits of a policy belonging to her husband, who passed away on August 7, 2021 and had made premium payments on time for 13 years. Although the plaintiff’s husband received notice on August 3 advising that his coverage under the policy was no longer being provided due to non-payment, at no time did New York Life provide the man with a form by which to designate a third party to receive such notifications, the lawsuit alleges.

The lawsuit looks to represent: 

“All beneficiaries who made a claim, or would have been eligible to make a claim, for the payment of benefits on life insurance policies issued or delivered in the State of California, that were in force on or after January 1, 2013 or renewed after January 1, 2013, and were lapsed or were terminated by New York Life for the non-payment of premium after January 1, 2013, and as to which policies the notice form as described by Sections 10113.72(a) of the California Insurance Code (the ‘Designation Notice Requirement’) or notice to change a designation as described in Section 10113.72(b) of the California Insurance Code (the ‘Annual Notice Requirement’), were not sent by New York Life prior to lapse or termination (hereinafter referred to as ‘Class’).” 

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