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Thread: Making a profit on soldiers' death benefits

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    Angry Making a profit on soldiers' death benefits

    Why are large life insurance companies profiting from billions of dollars they hold on behalf of the families of fallen military service members?
    Bloomberg Markets magazine senior writer David Evans posed that question in an article in its September issue. The article, which took a close look at practices at Prudential Financial, has sparked sharp criticism from Cabinet members, reform proposals from U.S. lawmakers, and a fraud investigation by the New York Attorney General.
    The U.S. Veterans Affairs Dept. and the National Association of Insurance Commissioners say they are reviewing military life insurance arrangements.

    "It's disgraceful on the part of insurance companies," Senator John McCain (R-Ariz.), a onetime prisoner-of-war in Vietnam, said in an interview on Bloomberg Television. "We'll obviously have to be looking into it."
    Under scrutiny are so-called retained-asset accounts. More than 100 carriers use the accounts to earn income on $28 billion owed to beneficiaries. New York-based MetLife, the biggest U.S. life insurer, retains about $10 billion and was among the carriers subpoenaed by Andrew Cuomo, the New York Attorney General.
    Many life insurance companies suggest to beneficiaries that as an alternative to taking a lump-sum payment of death benefits, they leave the bulk of the policy proceeds with the carriers.
    The accounts were set up for beneficiaries such as Cindy Lohman of Great Mills, Md. Her 24-year-old son had been killed by a bomb in Afghanistan. Prudential and the other insurers give the recipients limited checkbook-like access to the funds and pay modest interest.

    CONTINUED: http://www.msnbc.msn.com/id/38629691/ns/business-bloomberg_businessweek/
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    Re: Making a profit on soldiers' death benefits

    Quote Originally Posted by The Giant Noodle View Post
    Why are large life insurance companies profiting from billions of dollars they hold on behalf of the families of fallen military service members?
    Bloomberg Markets magazine senior writer David Evans posed that question in an article in its September issue. The article, which took a close look at practices at Prudential Financial, has sparked sharp criticism from Cabinet members, reform proposals from U.S. lawmakers, and a fraud investigation by the New York Attorney General.
    The U.S. Veterans Affairs Dept. and the National Association of Insurance Commissioners say they are reviewing military life insurance arrangements.

    "It's disgraceful on the part of insurance companies," Senator John McCain (R-Ariz.), a onetime prisoner-of-war in Vietnam, said in an interview on Bloomberg Television. "We'll obviously have to be looking into it."
    Under scrutiny are so-called retained-asset accounts. More than 100 carriers use the accounts to earn income on $28 billion owed to beneficiaries. New York-based MetLife, the biggest U.S. life insurer, retains about $10 billion and was among the carriers subpoenaed by Andrew Cuomo, the New York Attorney General.
    Many life insurance companies suggest to beneficiaries that as an alternative to taking a lump-sum payment of death benefits, they leave the bulk of the policy proceeds with the carriers.
    The accounts were set up for beneficiaries such as Cindy Lohman of Great Mills, Md. Her 24-year-old son had been killed by a bomb in Afghanistan. Prudential and the other insurers give the recipients limited checkbook-like access to the funds and pay modest interest.

    CONTINUED: http://www.msnbc.msn.com/id/38629691/ns/business-bloomberg_businessweek/
    Sorry, another nonissue raised for political hay.

    Insurance companies, for years, have elected to pay out benefits into a money market account instead of issuing a check directly to the beneficiary of a death benefit. The way it works is that they pay the money into a money market account -- and then send the beneficiary checks so they can access the money. Accessing the money is as simple as writing a check to deplete the account. Their policies clearly state they are going to do that. At the most, it keeps a beneficiary from their money for one week. At best, it allows a beneficiary to think about what they want to do with the money instead of suddenly receiving a $50,000 check. No harm. No foul.

    Another waste of Congress' time that allows to to "think" they're actually doing something.

    Don't be misled by this crap.
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    Re: Making a profit on soldiers' death benefits

    Quote Originally Posted by MaggieD View Post
    Sorry, another nonissue raised for political hay.

    Insurance companies, for years, have elected to pay out benefits into a money market account instead of issuing a check directly to the beneficiary of a death benefit. The way it works is that they pay the money into a money market account -- and then send the beneficiary checks so they can access the money. Accessing the money is as simple as writing a check to deplete the account. Their policies clearly state they are going to do that. At the most, it keeps a beneficiary from their money for one week. At best, it allows a beneficiary to think about what they want to do with the money instead of suddenly receiving a $50,000 check. No harm. No foul.

    Another waste of Congress' time that allows to to "think" they're actually doing something.

    Don't be misled by this crap.
    You're absolutely right. I heard about this on an AM talk show yesterday. It's not really a checking account, like what you get from a bank. Rather, it's a checkbook that allows the beneficiaries access to that account. Also, not all stores will accept these checks. However, as I understand it, a beneficiary can, if they want to, write a check for the full amount of the account and then deposit it into their own checking account.

    The AM talk show host, who is a financial advisor, said this wasn't a big deal and that such a practice is even preferable to giving out lump sums to those grieving a loss. He explained that when this happens to any of his clients, he tells all of them that they shouldn't do anything with a life insurance pay out for at least 6 months. People are going to use those 6 months for grieving, and they are in no shape to adequately put any life insurance pay out to good use. Also, they can become targets for financial predators. So having it as a checking account actually protects the beneficiaries until they become of sound mind to use that money when they are emotionally better suited to put it to good use.

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    Re: Making a profit on soldiers' death benefits

    the insurance company I work for started these a few years ago, while I was still a claim examiner. Many of the beneficiairies loved them (and made that clear in letters, surveys and phone calls.) since it gave them time to make a decision on what to do with the money. For the people that didn't like them, they could easily just write a check for the full amount of the account and deposit it to their bank (there were a few of these). I know that these accounts paid higher interest then a normal savings account, at least at the time I worked in that department. I'd assume they probably still do.

    IMO, Just an attempt to further demonize capitalism in general and insurance companies specifically.

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    Re: Making a profit on soldiers' death benefits

    And insurance company, that's in the insurance business to make a profit. I'm beside myself with outrage!!
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: Making a profit on soldiers' death benefits

    Quote Originally Posted by apdst View Post
    And insurance company, that's in the insurance business to make a profit. I'm beside myself with outrage!!
    What do you want the companies to do? And isn't that a high risk job? Considering it's Armed Services.... Look if the demand is there, let it continue, but if the majority of people vote it out of their state, then that is fine too. Just have to move to another state that would allow it. And I can actually see why some people choose to have the insurance, sometimes the death benefits from the VA might not be enough for the spouse and if the spouse becomes a single parent, then the extra money could help him or her.

    So before anyone starts jumping the gun and claiming something, why not figure out why it is being done. Sound immoral right? But it might make sense for those few.
    We the People of the United States,... provide for the common defence, promote the general Welfare....
    Where did it ever say, promote for the common defence, and provide the general Welfare..... Please don't mix up the two....

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    Re: Making a profit on soldiers' death benefits

    Quote Originally Posted by MCS117 View Post
    What do you want the companies to do? And isn't that a high risk job? Considering it's Armed Services.... Look if the demand is there, let it continue, but if the majority of people vote it out of their state, then that is fine too. Just have to move to another state that would allow it. And I can actually see why some people choose to have the insurance, sometimes the death benefits from the VA might not be enough for the spouse and if the spouse becomes a single parent, then the extra money could help him or her.

    So before anyone starts jumping the gun and claiming something, why not figure out why it is being done. Sound immoral right? But it might make sense for those few.
    I think you failed to pick up on poster's sarcasm, MCS. The rest of your post is....confusing.
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    Re: Making a profit on soldiers' death benefits

    Quote Originally Posted by MCS117 View Post
    What do you want the companies to do? And isn't that a high risk job? Considering it's Armed Services.... Look if the demand is there, let it continue, but if the majority of people vote it out of their state, then that is fine too. Just have to move to another state that would allow it. And I can actually see why some people choose to have the insurance, sometimes the death benefits from the VA might not be enough for the spouse and if the spouse becomes a single parent, then the extra money could help him or her.

    So before anyone starts jumping the gun and claiming something, why not figure out why it is being done. Sound immoral right? But it might make sense for those few.
    You totally missed the sarcasm, bro.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: Making a profit on soldiers' death benefits

    Quote Originally Posted by MaggieD
    Sorry, another nonissue raised for political hay.

    Insurance companies, for years, have elected to pay out benefits into a money market account instead of issuing a check directly to the beneficiary of a death benefit. The way it works is that they pay the money into a money market account -- and then send the beneficiary checks so they can access the money. Accessing the money is as simple as writing a check to deplete the account. Their policies clearly state they are going to do that. At the most, it keeps a beneficiary from their money for one week. At best, it allows a beneficiary to think about what they want to do with the money instead of suddenly receiving a $50,000 check. No harm. No foul.

    Another waste of Congress' time that allows to to "think" they're actually doing something.

    Don't be misled by this crap.
    The problem is when the insurance company is making a 5% rate of return whereas the beneficiary is only making 0.5% or 1%.
    "I do not claim that every incident in the history of empire can be explained in directly economic terms. Economic interests are filtered through a political process, policies are implemented by a complex state apparatus, and the whole system generates its own momentum."

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    Re: Making a profit on soldiers' death benefits

    Quote Originally Posted by Khayembii Communique View Post
    The problem is when the insurance company is making a 5% rate of return whereas the beneficiary is only making 0.5% or 1%.
    Why is that a problem? The insurance company is taking the risk of the investment. The beneficiary has zero risk, since it's a fixed account. Since they do the same thing, what's next, preventing banks from making a profit on normal savings accounts issued to soldiers or beneficiaries of soldiers? I know Obama has already demonized profits and banks, but cmon man.

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