PRESS-NEWS.org - Press Release Distribution
PRESS RELEASES DISTRIBUTION

Insurance Companies Shamelessly Profit From The Death of Servicemembers

Who should be allowed to profit from the death of servicemembers? The question is almost so appalling as to be absurd. And yet, those are the accusations made by family members.

2010-09-18
September 18, 2010 (Press-News.org) Who should be allowed to profit from the death of Soldiers, Sailors, Airmen, and Marines? The question is almost so appalling as to be absurd. And yet, those are the accusations made by family members, that insurance companies are taking advantage of the death of military personnel to make substantial profits on their life insurance proceeds.

Prudential Financial Inc. is a government contractor handling term life insurance policies for military personnel; it is called Servicemember Group Life Insurance (SGLI).When servicemembers die, though, the company does not pay the benefits to the intended beneficiaries of the policy.Instead, this insurance company pays these widows, their children, or these parents in a manner that appears to be both deceptive and greedy.

The insurance company provides a 'checkbook' to the deceased military member's survivor-beneficiary, and the insurance company tells the grieving survivor that the company will keep the proceeds in a convenient, secure, interest-bearing account for the survivor. The insurance company issues documents resembling checks, leaving the grieving survivors to believe that the funds have been placed in a bank account of some sort that belongs to them, as the beneficiaries of the life insurance policy. Oftentimes beneficiaries leave these funds in these accounts for months or even years; understandably deciding what to do with these insurance proceeds is not, for many months, a top priority for the grieving.

In establishing this arrangement, though, Prudential has been accused of leaving out significant details. Notably, as stated in a pending lawsuit against the insurance company, the survivors who make up the plaintiff class in this case state that Prudential does not make it clear to the beneficiaries that the company is not transferring these funds to an FDIC-insured bank account; instead, Prudential is placing these funds into its own general corporate account.

Though the survivors receive a small amount of interest on the accounts, it is only a fraction of the interest that Prudential earns. For example, the policy beneficiaries might be given a one half percent annual interest rate, while Prudential's corporate account earns nearly five percent. The difference provides for significant profits for the insurance company, money that could go to the surviving family members, if they were properly informed of this scam.

The documents that appear to be checks are, in fact, little more than company-issued IOUs, branded with a bank name. The surviving family members state that these 'checks' cannot be used at retail establishments. If the 'checks' were to be deposited in a recipient's bank account, Prudential would have to send money to the recipient bank in a cumbersome process.

No public statistics are available regarding the true value of these accounts to insurance companies. According to Bloomberg news service, insurers are holding on to at least $28 billion dollars owed to survivors in these sorts of accounts (known as retained-asset accounts). At five percent interest, the profits that such assets generate are huge.

The Problems with Retained-Asset Accounts

Prudential has responded to press inquiries on this practice by defending them, suggesting that grieving family members enter into this disadvantageous financial arrangements freely and voluntarily. In its public statements, the insurance company has not demonstrated that it understands the immorality, deviousness, and perhaps illegality of this practice.

Life insurance policies, like SGLI, are intended to provide financial support for the families and loved ones of those who have died. Insurance companies are expected to make a profit by investing premiums, thereby producing income in excess of the expense of payment of benefits and other costs. Prudential is additionally profiting, though, from military personnel who have lost their lives in the service of their country. As this lawsuit alleges, the insurance company is cheating the loved ones of dead servicemembers by retaining substantial profits for itself rather than offering the survivors the full benefits of the investment of the proceeds of these policies.

By issuing documents that appear to be checkbooks, the insurance company gives the appearance of maintaining personal accounts on behalf of the survivors. While the insurance company claims that it fully discloses the nature of the accounts, one can hardly expect the bereaved to read the fine print explaining the particulars of the arrangement.

Prudential asserts that these practices are in compliance with state insurance laws and industry customs; however, the insurance company's practices have not yet been considered by our courts. At least a handful of people have sued insurance companies regarding these deceptive practices, claiming that these companies have stolen account earnings from beneficiary families.

Essentially, the insurance companies are deceiving family members into believing that they are receiving a bank account that contains the insurance proceeds from their deceased family member's life insurance. The surviving family members are being told that they are being given checks to write on this lump sum amount. These insurance company 'checkbooks' are not covered by the regulations and protection in the banking system. These accounts are not FDIC insured; they are only subject to the guarantee of the insurance company offering the policy. Every servicemember elects SGLI expecting the full lump sum will go to the designated beneficiary; the insurance company is using this ruse to prevent that, for their financial benefit.

The Department of Veterans Affairs has sent letters to families with these accounts, making it clear that they have the right to withdraw funds immediately and to move the money to any bank account. Several individuals and organizations have called for further inquiry, including U.S. senators, U.S. representatives, state officials, and officials from the Department of Veterans Affairs.

These inquiries and notices help to correct this despicable conduct towards our military heroes' families, but they will not compensate the surviving family members for the insurance company's prior misconduct. Those who have been the victims of these deceptive practices may have further legal recourse. For more information regarding the law on these matters, speak with a knowledgeable attorney.

Article provided by Patrick J. McLain
Visit us at www.texasmilitaryjustice.com


ELSE PRESS RELEASES FROM THIS DATE:

With The Housing Market In Shambles, Who Will Pay?

2010-09-18
Although the real estate market began its collapse several years ago, banks and lenders continue to sort out the related issues today. According to the New York Times, during the real estate boom years banks nationwide lent homeowners more than approximately a trillion dollars in the form of home equity loans. These loans were secured solely by the value of homes, which once seemed to increase without bound. As home values rapidly declined, though, so did the ability and willingness of these homeowners to repay their home equity loans. The American Bankers Association ...

Social Media in Divorce Proceedings

2010-09-18
New social media such as Facebook, MySpace and Twitter have provided a forum for many of us to interact with friends. Whether catching up with friends with whom we may have lost touch, sharing pictures of our families or our weekend adventures, or using the media to brag or "vent" about something we feel strongly about, social media allows us the ability to do all of this and more. While this may seem like innocent fun, many are finding out that what is posted or "tweeted" on or through these media sites can and will be used against them in family court. In a world ...

Workers' Compensation and Social Media Sabotage in New York

2010-09-18
Workers' compensation helps many employees injured on the job to heal without the threat of financial ruin. These workers face an inability to work coupled with unexpected medical bills; luckily the workers' compensation system helps them to stay afloat. Unfortunately, some people abuse the system by exaggerating the extent of their injuries or by providing evidence for an injury that did not actually occur. These dishonest few have made it more difficult for employees with real injuries, who are now watched with critical eyes. While social media websites like Facebook ...

Child Custody Tips for Texas Parents

2010-09-18
When deciding child custody arrangement, it is important to understand that the court will always decide custody disputes based on the "best interest of the child" standard. With this in mind, remember that there are ways to prepare for custody hearings that may increase your chances of achieving your desired result. It is important to understand the terminology and presumptions that are used by the court. In Texas, custody is referred to as "conservatorship." There is a presumption that the parents should serve as "joint managing conservators," however, this does not ...

Spikes in Auto Recalls: Is the Auto Industry Growing More Cautious?

2010-09-18
Automakers have recalled nearly 20 million vehicles in the past year, including some recalls involving marginal safety risks. The spike in recalls prompts industry observers to wonder if manufacturers have become more concerned with safety, whether they're under pressure from an energized federal watchdog or whether they're simply doing all they can to avoid the damaging publicity Toyota endured during its massive recalls late in 2009 and early this year. In the first half of 2010, carmakers recalled 10.2 million vehicles, according to the Detroit News. That's about ...

FDA Warns Use of Reglan Can Lead to Uncontrollable Facial Movements

2010-09-18
Of all the various rules, regulations and warnings issued by the U.S. Food and Drug Administration (FDA), the most serious is a black box warning. The name refers to text that must appear in a black box on the drug package insert, warning users of very serious side effects. In February 2009 the FDA released a black box warning for metoclopramide, better known in the U.S. by its trade name of Reglan. Prolonged use of Reglan has been associated with tardive dyskinesia, a muscular disorder in which the patient has frequent uncontrollable movements of the face and mouth, ...

Toyota Issues Yet Another Recall

2010-09-18
In the wake more than 1,000 complaints to the National Highway Traffic Safety Administration (NHTSA), Toyota is recalling more than 1.1 million Corolla and Matrix vehicles, model years 2005-2008. The recall centers on a faulty electronic control module (ECM), which is a circuit board that helps control the engine's operation. A faulty ECM can lead to vehicle stalling without warning and at any speed, and then not restarting. One NHTSA complaint states: "I was driving 60 mph on the freeway and was almost hit from behind [when the engine stalled]. Another time I was ...

Michigan's Specialty Drug Teams Target College Students

2010-09-18
A 2009 incident involving a Grand Valley State University student who was shot by a specialty-drug-team officer highlights the fact that Michigan State Police target college students through drug busts in dorms and campus apartments. Accordingly, it is important for students to know their rights and options regarding police interaction and drug charges. The Specialty-Drug-Team Shooting Derek Copp, a GVSU student, said he was studying with his roommate at their Campus View apartment when he heard a knock at their sliding glass door in March 2009. Deputy Ryan Huizenga ...

Texas Cities Cracking Down on Overdue Child Support

2010-09-18
In 2009, the top 10 child support evaders in Texas owed more than $500,000 in collective back payments and interest to their children. One parent alone owed over $130,000 in support for his two children. In March of this year, an ABC report noted that the most wanted list of child support evaders, published by the Office of the Attorney General, owed over $1 million in delinquent payments, with the top offender owing more than $160,000. According to the Office of the Attorney General's Child Support Division, Texas law requires the Office of the Attorney General to develop ...

A Spate of Motorcycle Accidents Highlights the Risks of Hitting the Road

2010-09-18
The winding roads of western North Carolina are a haven for motorcycle enthusiasts around the south. With the increase in bike traffic, however, comes a higher risk of accidental injury or death. The recent death of former police officer Gerald Droze proves that even the most experienced riders are vulnerable when sharing the road with larger vehicles. The freedom and sense of liberation associated with motorcycling -- the wind in your hair, the sun on your face, the speed and joy of passing cars by -- can prove to be a distraction. Many people, particularly novice operators, ...

LAST 30 PRESS RELEASES:

Artificial intelligence outperforms clinical tests at predicting progress of Alzheimer’s disease

ReMDO announces inaugural Piedmont Triad Regenerative Medicine Engine Ecosystem Summit in Winston-Salem, North Carolina

HarvestHub app tackles supply chain, food insecurity issues

Mathematics outreach program awarded Dolciani grant

Groundbreaking study reveals insights into Alzheimer's disease mechanisms through novel hydrogel matrix

Study examines urban forests across the United States

2023 Rolling Hills Estates landslide likely began the winter before

Rutgers researchers spot potential hazard with private well water treatment

When to trust an AI model

Research shows gamified investment sites have risks for novice investors

Specially equipped natural killer cells show effectiveness against the most common form of ovarian cancer

Entering the golden age for antibody-drug conjugates in gynecologic cancer

Judge: Texas university must release records on research study that resulted in deaths of dozens of animals

UMass Amherst food scientist rises to the challenge of giving marbled fatty feel and taste to plant-based meat

Complex impact of large wildfires on ozone layer dynamics unveiled by new study

Brain inflammation triggers muscle weakness after infections

Research alert: All stem cell therapies are not created equal

Complex impact of large wildfires on ozone layer dynamics

AI found to boost individual creativity – at the expense of less varied content

Texas A&M research collaboration uncovers how domestic rabbits become feral in the wild

Scientists find new way global air churn makes particles

Researchers discover a new neural biomarker for OCD

Vivid portrait of interacting galaxies marks Webb’s second anniversary

UMass Amherst awarded $2.1 million to advance the science of engagement in community-academic research partnerships

With gene editing, mice with a form of inherited deafness can hear again

Sant Pau researchers discover a new gene that causes ALS

Synthetic biology reveals the secrets of life without oxygen

UC3M student startup, Solaris Vita, awarded in Europe's largest entrepreneurship competition

How plant cold specialists can adapt to the environment

Biomarkers reveal how patients with glaucoma may respond to treatment

[Press-News.org] Insurance Companies Shamelessly Profit From The Death of Servicemembers
Who should be allowed to profit from the death of servicemembers? The question is almost so appalling as to be absurd. And yet, those are the accusations made by family members.