- Sep 2, 2008
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Fallen Soldiers' Families Denied Cash as Insurers Profit - Bloomberg
So would any good USMBer care to defend these vultures who steal from the families of our dead soldiers? Maybe give a little spiel about how we can trust these companies?
The package arrived at Cindy Lohmans home in Great Mills, Maryland, just two weeks after she learned that her son, Ryan, a 24-year-old Army sergeant, had been killed by a bomb in Afghanistan. It was a thick, 9-inch-by- 12-inch envelope from Prudential Financial Inc., which handles life insurance for the Department of Veterans Affairs.
Inside was a letter from Prudential about Ryans $400,000 policy. And there was something else, which looked like a checkbook. The letter told Lohman that the full amount of her payout would be placed in a convenient interest-bearing account, allowing her time to decide how to use the benefit.
Prudential disclosed that what it called its Alliance Account was not guaranteed by the Federal Deposit Insurance Corp., Bloomberg Markets magazine reports in its September issue.
Lohman, 52, left the money untouched for six months after her sons August 2008 death.
Its like youre paying me off because my child was killed, she says. It was a consolation prize that I didnt want.
As time went on, she says, she tried to use one of the checks to buy a bed, and the salesman rejected it. That happened again this year, she says, when she went to a Target store to purchase a camera on Armed Forces Day, May 15.
It was being held in Prudentials general corporate account, earning investment income for the insurer. Prudential paid survivors like Lohman 1 percent interest in 2008 on their Alliance Accounts, while it earned a 4.8 percent return on its corporate funds, according to regulatory filings.
Im shocked, says Lohman, breaking into tears as she learns how the Alliance Account works. Its a betrayal. It saddens me as an American that a company would stoop so low as to make a profit on the death of a soldier. Is there anything lower than that?
Millions of bereaved Americans have unwittingly been placed in the same position by their insurance companies. The practice of issuing what they call checkbooks to survivors, instead of paying them lump sums, extends well beyond the military.
In the past decade, these so-called retained-asset accounts have become standard operating procedure in an industry that touches virtually every American: There are more than 300 million active life insurance policies in the U.S., and the industry holds $4.6 trillion in assets, according to the American Council of Life Insurers.
Insurance companies tell survivors that their money is put in a secure account. Neither Prudential nor MetLife Inc., the largest life insurer in the U.S., segregates death benefits into a separate fund.
The sweeping financial regulatory legislation signed by President Barack Obama on July 21 doesnt address retained-asset accounts. It creates a new federal insurance office, which wont be a regulator. It will collect information, monitor the industry for systemic risk and consult with state insurance regulators.
So would any good USMBer care to defend these vultures who steal from the families of our dead soldiers? Maybe give a little spiel about how we can trust these companies?