DEATH PROFIT: Fallen Soldiers' Families Denied Cash as Prudential, MetLife Gain
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The package arrived at Cindy Lohman’s 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 Ryan’s $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.
“You can hold the money in the account for safekeeping for as long as you like,” the letter said. In tiny print, in a disclaimer that Lohman says she didn’t notice, 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 son’s August 2008 death.
“It’s like you’re paying me off because my child was killed,” she says. “It was a consolation prize that I didn’t 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.
‘I’m Shocked’
Lohman, a public health nurse who helps special-needs children, says she had always believed that her son’s life insurance funds were in a bank insured by the FDIC. That money -- like $28 billion in 1 million death-benefit accounts managed by insurers -- wasn’t actually sitting in a bank.
It was being held in Prudential’s 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.
“I’m shocked,” says Lohman, breaking into tears as she learns how the Alliance Account works. “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. 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.
Touching Americans
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.
Newark, New Jersey-based Prudential, the second-largest life insurer, holds payouts in its own general account, according to regulatory filings.
New York-based MetLife has told survivors in a standard letter: “To help you through what can be a very difficult, emotional and confusing time, we created a settlement option, the Total Control Account Money Market Option. It is guaranteed by MetLife.”
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Jan 17, 2011 at 4:54 PM
Reader Comments (62)
Your mentor, whether you know it or not.
Hard to conceive having a wise and trusted counselor or teacher WITHOUT knowing it. UNLESS of course you just said that simply because you're exercising your God-given American right to RAMBLE incoherently.
men·tor (mntôr, -tr)
n.
1. A wise and trusted counselor or teacher.
2. Mentor Greek Mythology Odysseus's trusted counselor, in whose guise Athena became the guardian and teacher of Telemachus.
v. men·tored, men·tor·ing, men·tors Informal
v.intr.
To serve as a trusted counselor or teacher, especially in occupational settings.
v.tr.
To serve as a trusted counselor or teacher to (another person).
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http://afpakwar.com/blog/archives/4866
http://www.consumersforpeace.org/pdf/war_crimes_iraq_101006.pdf
http://www.globalresearch.ca/articles/FOE201A.html
http://www.wsws.org/articles/2009/jan2009/dark-j17.shtml
http://www.twf.org/News/Y1998/WarCrimes.html
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Curtis Lemay
A good plan violently executed now is better than a perfect plan executed next week.
George S. Patton
The object of war is not to die for your country but to make the other bastard die for his.
George S. Patton
Everyone's a pacifist between wars. It's like being a vegetarian between meals.
Colman McCarthy
It is forbidden to kill; therefore all murderers are punished unless they kill in large numbers and to the sound of trumpets.
Voltaire
But courage which goes against military expediency is stupidity, or, if it is insisted upon by a commander, irresponsibility.
Erwin Rommel
One man with a gun can control 100 without one.
Vladimir Lenin
It is double pleasure to deceive the deceiver.
Niccolo Machiavelli
In war there is no substitute for victory.
Douglas MacArthur
It is fatal to enter any war without the will to win it.
Douglas MacArthur
A people free to choose will always choose peace.
Ronald Reagan
Sun Tzu
Sun Tzu
"If you fail to spread the Hawaiian Tropic on evenly, you are certain to wind-up with skin stains"
Sun Tan
Dick said you look like a agitator for unlawful combatants.