New Jersey lawmakers approved bill to expand life insurance annuity account protections

TRENTON, N.J. (KYW Newsradio) — State lawmakers have approved a bill to increase the amount of money people are entitled to if the company that handles their life insurance annuity goes bankrupt.

A life insurance annuity is not like term life insurance. It’s more like a savings account. This protection is similar to FDIC insurance for bank accounts. The previous amount protected was $100,000.

Under the legislation, New Jersey residents who have paid into their life insurance annuity would receive $250,000 if the company goes belly up.

“It really gives some type of sense of security to investors knowing their money is secure and that, when they put their savings in, they don’t have to worry about it — just like they do with their bank or investment group that’s protected by FDIC,” says bill sponsor Sen. Robert Singer.

He says the previous law was written in the early 1990s, and it was time for an update.

“You know, $100,000 doesn’t go as far as it used to,” he said.

“We felt, with the industry, it was a safeguard for consumers. They know up to a quarter of a million dollars is protected, and there’s an insurance policy for it. And they can feel more secure, and I think that’s important.”

Singer says this is expected to help thousands of people every year.

“It really is a great safety net for consumers to know that their money is protected.”

The bill passed unanimously in the Senate and the Assembly. Now the bill is just awaiting Governor Murphy’s signature.