Whatif

Although we are both carrying quite a bit of life insurance, I believe that if we were killed in a terrorist bombing or flight hi-jacking, no death benefit would be paid because it would considered an "act of war."

Is this correct? Has anyone looked into this? Is anyone aware of any moves to offer one-flight-only flight insurance as they did in the era of hijackings to Cuba? Is anyone aware of travel insurance that would not exclude such events?

Lori

I am an attorney who specifically reviews and handles life insurance. Your question is a good one – one that has cropped up a lot recently. Most life insurance policies contain an exclusion for death that occurs “during war or an act of war”. So far, however, there are no policies that contain exclusions for “acts of terrorism”. Here in NY, we are not allowing companies to include new terrorism exclusions. So, as morbid of a topic as this is, if you are killed in an act of terrorism, your death benefit would be paid. Heaven forbid anything like that would happen.

Major

Interesting answer, Lori. So does there have to be a Congressional declaration of war before the insurance companies could decline to pay the benefit? And do you have any experience where insurance companies have had to be taken to court to pay on an act of terrorism?

I was told by an insurance salesman (obviously not the best source) that if they covered terroristic acts, the premiums would go through the roof. I think he was just blowing smoke.

Whatif

Thanks, Lori, and I second Major's questions?

You say that New York is disallowing anti-terrorist act provisions -- so I take it that it's a state-by-state decision? How can I find out what's the situation in my own state?

WhyNot

Whatif: why aren't you either calling the insurance company directly or your agent?

Lori

I don’t believe that there are any states out there that would NOT pay in the event of death due to a terrorist act. Terrorism is not considered an “act of war”, and so therefore cannot be excluded. The Federal government’s concern has been with property/casualty insurance, since there have been several large insurance companies who have attempted to pull out of providing coverage for large, well-known buildings.

The insurance agent was indeed misinformed. Companies DO cover terrorism, as they are not allowed by law to exclude it. I also am not familiar with any insurance companies being taken to court over payment of a death benefit due to an act of terrorism. The company would indeed lose, since they are required to pay the benefit, since a terrorism exclusion cannot be a part of their issued policies.

Hope this helps.

What if

Thanks again, Lori. I posted here because I thought it would be of interest to others and because I wondered if anyone had noticed travel/trip/flight insurance cropping up anywhere. Remember the machines in airports?

(Of course I can call my own agents (and may well), but that would only give me an answer about coverage we already have, not new coverage from someone else.)