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Soldiers' death benefits - 8/9/2010 11:33:49 PM

tazzygirl

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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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RE: Soldiers' death benefits - 8/10/2010 7:27:32 AM

willbeurdaddy

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If they are misleading about the safety of the funds, especially implying that they are guaranteed, then they should be fined for it. Under insurance reserve laws, however, that money is supposed to be fully reserved and invested conservatively, since it is an already approved claim.

Outside of those issues, no big deal. It's how insurance companies and banks always make their money.

(in reply to tazzygirl)

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RE: Soldiers' death benefits - 8/10/2010 8:15:22 AM

pahunkboy

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yeah- there is alot of fraud. -- business as usual.

(in reply to willbeurdaddy)

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RE: Soldiers' death benefits - 8/10/2010 11:46:51 AM

flcouple2009

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John needs to get a grip. I saw him on the news last week and he looks every bit the bent over hunched up old grouch.

Sure the insurance company makes money. The risk to the money is well overstated in the article. It will be there, the first time it was not the insurance company would be risk losing their license. Sure they could earn a bigger return investing it themselves, but they also have the risk of losing it.

It's a trade off. They have some access to the money, the money is safe, and they get some return.

(in reply to pahunkboy)

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RE: Soldiers' death benefits - 8/10/2010 11:49:00 AM

pahunkboy

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the fake check part- sounds so Nigerian. LOL

(in reply to flcouple2009)

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