Industry Concerned That Victim Bill Penalizes Life Insurance Policyholders
The portion of legislation passed in the aftermath of the Sept. 11 terrorist attacks is raising concern in the life insurance industry. The bill says that any compensation paid to victims is being reduced by amounts received from any ‘collateral sources.’
Collateral sources, as defined in the legislation, include “life insurance, pension funds, death benefit programs, and payments by Federal, State, or local governments related to the terrorist-related aircraft crashes of September 11, 2001.”
Industry spokespersons contend that this results in reduced compensation for those victims who had these other benefits, specifically citing life insurance policies. Compensation paid out to these families will be net of any life insurance proceeds that are received as a result of the attacks, they say.
“If somebody had individual life insurance, which means they planned for their future, they spent their own money, they did their own preparedness, they will receive reduced benefits” says Ann Hartmann, president of the Society of Financial Service Professionals.