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<p class=MsoNormal>“Survivors of service men and women are told they'll
get a $400,000 life insurance payout. They don't. Instead, Prudential —
which has a government contract to provide life insurance for military families
— keeps their money.”<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>“But the money isn't in a bank, and it's not protected
by FDIC insurance. None of these facts are spelled out to the survivors; the
details are often hidden in fine print.”<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Courtesy of NPR at:<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal><a
href="http://www.npr.org/templates/story/story.php?storyId=128799983&ps=cprs">http://www.npr.org/templates/story/story.php?storyId=128799983&ps=cprs</a><o:p></o:p></p>
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<p class=MsoNormal style='border:none;padding:0in'><o:p> </o:p></p>
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<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Life Insurance Firms Profit From Death Benefits<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Life insurance companies delay issuing death benefits owed
to families of service members and others by promising to hold the money in
safekeeping, an investigation by Bloomberg Markets magazine found. Senior
writer David Evans and Cindy Lohman, whose son was killed in Afghanistan,
discuss the findings with NPR's Robert Siegel.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Millions of Americans are being duped by life insurance
companies that have figured out a way to hold onto death benefits owed to
families. MetLife and Prudential lead the way in making hundreds of millions of
dollars in secret profits every year on money that belongs to relatives of
those who die, an investigation by Bloomberg Markets magazine found. Among the
people being tricked are parents and spouses of U.S. soldiers killed in battle
in Iraq and Afghanistan.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Survivors of service men and women are told they'll get a
$400,000 life insurance payout. They don't. Instead, Prudential — which
has a government contract to provide life insurance for military families
— keeps their money.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Families are surprised when they receive what looks like a
checkbook. In documents, Prudential promises to hold the money in safekeeping
for as long as families would like, saying it will pay them 0.5 percent
interest. What Prudential doesn't disclose is that it is keeping survivors'
money in Prudential's own corporate investment account, where the company is
earning five to 10 times as much as it pays to families. The so-called checks
have JPMorgan Chase printed on them, but they cannot be used as regular checks.
Instead, they are to be submitted back to Prudential to get any money.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>But the money isn't in a bank, and it's not protected by
FDIC insurance. None of these facts are spelled out to the survivors; the
details are often hidden in fine print.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Nor are families told that they could earn more than twice
as much interest by opening FDIC-insured money market accounts at banks across
the country. Families of fallen soldiers say they often don't want to touch the
"checkbooks" because they view them as payments in return for their
sacrificed child. As a result, Prudential holds onto the death benefits, often
for a year or more. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>"I'm shocked," says Cindy Lohman, a Maryland woman
whose son, Ryan, was killed in Afghanistan in 2008. "It's 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."<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Millions of Americans have unwittingly been placed in the
same position by their insurance companies. The practice of issuing so-called
"checkbooks" to survivors, instead of paying out lump sums, extends
well beyond the military. In the past decade, this tactic has 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. MetLife
alone holds $10 billion in death benefit money that belongs to grieving
families. MetLife makes $100 million to $300 million a year by investing,
mostly in the bond market, money that belongs to survivors.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Insurance companies say they're providing their customers
with a service. Prudential's checkbook accounts are helpful to families of
soldiers, says company spokesman Bob DeFillippo. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>"For some families, the account is the difference
between earning interest on a large amount of money and letting it sit
idle," he says. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>MetLife spokesman Joseph Madden says his company's customers
are very happy with the system. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>"The feedback from customers has been overwhelmingly
positive," he says. "We afford beneficiaries security, peace of mind
and time to make an informed decision — while earning interest in the
interim."<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>How big is the unregulated quasi-banking system operated by
insurers? There are now more than a million of these accounts holding more than
$28 billion at 130 life insurance companies.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>"It's outrageous that they're profiting off other
people's grief," says Mark Umbrell in Doylestown, Pa. His 26-year-old son,
Colby, an Army Airborne Ranger who earned a Bronze Star and a Purple Heart, was
killed in Iraq in May 2007. Umbrell was among those who got a
"checkbook" account. "I think we're being taken," he says.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>The question for Umbrell, Lohman and a million others with
these accounts is whether anyone will hear their cries. State bank regulators
say if there are to be any changes, they should be made by their counterparts
at state insurance departments. Officials at those state agencies often say
they don't even understand what the insurance industry is doing with these
"checkbook" payouts. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Just six states had any rules for retained-asset accounts as
of July 2009, according to the National Association of Insurance Commissioners.
Arkansas, Colorado, Kansas, Nevada, North Carolina and North Dakota require
insurers to disclose fees and interest rates and to tell survivors they may
withdraw all of the money by writing a single check. Maryland, which isn't on
the NAIC list, also has rules. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Pennsylvania Insurance Commissioner Joel Ario, whose state
has no rules for retained-asset accounts, says he has asked his staff to
prepare a regulation forbidding insurance companies from using such accounts as
the default method of paying a death.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>"It's flown under the radar," says insurance law
professor and author Jeffrey Stempel. "Regulators have not done their
job."<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Until public officials wake up, the bereaved will remain a
secret profit center for the life insurance industry.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>-----------------------<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>The VA's Response<o:p></o:p></p>
<p class=MsoNormal>Below is a statement from Mike Walcoff, acting
undersecretary for the Veterans Benefits Administration, in response to the
Bloomberg Markets magazine report.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>"The primary goal of the Government Life insurance
programs for Servicemembers and Veterans has always been to ensure the
financial security of their families and loved ones during a very difficult
time. The possibility that life insurance companies are profiting
inappropriately from these Servicemembers' sacrifice is completely
unacceptable. The VA is conducting a full investigation into the life insurance
companies and their procedures in this program to ensure that survivors are
fully protected and being treated fairly with the utmost care and respect. The
VA is deeply concerned that military and Veteran families may potentially be
harmed in some way by the use of the Alliance Account program. At the
conclusion of the investigation VA will determine whether to continue the use
of the Alliance Account program. Additionally, VA will be contacting the
approximately 10,000 current survivors to remind them of their options under
the SGLI program."<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
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<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>An audio broadcast is available at:<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>NPR’s “All Things Considered”<o:p></o:p></p>
<p class=MsoNormal><a
href="http://www.npr.org/templates/player/mediaPlayer.html?action=1&t=1&islist=false&id=128799983&m=128830024">http://www.npr.org/templates/player/mediaPlayer.html?action=1&t=1&islist=false&id=128799983&m=128830024</a><o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Seeya at Farmers Market, Moscow.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Tom Hansen<o:p></o:p></p>
<p class=MsoNormal>Moscow, Idaho<o:p></o:p></p>
<p class=MsoNormal> <o:p></o:p></p>
<p class=MsoNormal><span style='font-family:"Arial","sans-serif"'>"Patriotism
is not a short and frenzied outburst of emotion but the tranquil and steady
dedication of a lifetime."<o:p></o:p></span></p>
<p class=MsoNormal><span style='font-family:"Arial","sans-serif"'><o:p> </o:p></span></p>
<p class=MsoNormal><span style='font-family:"Arial","sans-serif"'>-- Adlai E.
Stevenson, Jr.<o:p></o:p></span></p>
<p class=MsoNormal><o:p> </o:p></p>
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