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tazzygirl -> Soldiers' death benefits (8/9/2010 11:33:49 PM)
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Making a profit on soldiers' death benefits
'It's disgraceful on the part of insurance companies,’ McCain says
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.
Meanwhile, the carriers can invest the money, obtaining a far higher return than what they offer to beneficiaries. Families often receive misleading guarantees about the safety of the accounts, which are held in corporate coffers, not in federally insured banks, Bloomberg Markets found.
http://www.msnbc.msn.com/id/38629691/ns/business-bloomberg_businessweek
Im not sure how i feel about this. Guess i dont know enough to make a decision yet. Anyone in the industry feel like chiming in?
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