In the widespread, legal practice first reported by Bloomberg Markets magazine, insurance companies provide a small amount of interest to grieving families and provide a checkbook to withdraw funds. Meanwhile, the companies that hold the benefits collect greater interest.
The New York Democrat says he is crafting a measure that would require the Department of Veterans Affairs and the federal personnel office for all federal workers to contract with companies that offer a lump sum payment for a death benefit as the default.
There was no immediate comment from Veterans Affairs.
