Health of Insured at Policy Delivery in NY
In several recent policy form reviews, both prior approvals and post-approval reviews, the NYSID has raised an issue that may warrant some investigation of policy delivery practices at your company. It arises when applications include a statement along the lines that the policy does not take effect unless the insured is insurable or in "good health" at the time the policy is delivered.
At policy delivery there are two possibilities: one is that money was collected and a conditional receipt or temporary insurance agreement provided. The Department's position is that when a conditional receipt was issued the insured need not be insurable at delivery and so the affirmation in the signature section is not permissible. The other possibility is that no money was collected at application. In that instance, a statement in the base application regarding continued good health status is permissible, but the Department requires that a form such as a "Statement of Good Health" be used at delivery (this must be a filed and approved form) in order to collect information on health status.
This position is likely to come up in future post-approval reviews, and so companies would be well-advised to review applications approved on a CL6 basis, as well as their actual practices on policy delivery to determine whether they are in compliance with the rules set out above or whether a revision to the form or the filing of a Statement of Good Health should be considered.
