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Insurers Rip Off Families of Fallen US Soldiers

Keep payouts in interest-bearing accounts and skim off profits

By Caroline Miller,  Newser Staff

Posted Jul 29, 2010 7:35 AM CDT
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(Newser) – It turns out that insurers handling death benefits for American soldiers have got a sweet scam going that enables them to keep profiting from the money even after it is supposedly paid out to families. They tell bereaved relatives that they've opened a convenient, interest-bearing account for their money that's a nice, safe place to keep it and they give them a "checkbook." But it's not a normal checkbook, they don't open individual accounts for each soldier, and they skim off most of the interest the money is making—giving beneficiaries 1% while it's earning 4%.



The military families are getting less than half the interest they would in a normal account, Bloomberg reports. Not only that, the money held in these general corporate accounts at Prudential or MetLife, isn't insured by the FDIC. Prudential says they make it clear to military families that they can take their money out anytime they want, but an insurance law professor isn't impressed. “It’s institutionalized bad faith,” he says. “It’s turning death claims into a profit center.”

Nelda Mercado of New York grieves as her son, Master Sgt. Pedro Mercado, is buried at Arlington National Cemetery just outside of Washington in Arlington, Va., Thursday, July 22, 2010.
Nelda Mercado of New York grieves as her son, Master Sgt. Pedro Mercado, is buried at Arlington National Cemetery just outside of Washington in Arlington, Va., Thursday, July 22, 2010.   (AP Photo/J. Scott Applewhite)
The casket of Army Pfc. David T. Miller is carried during his funeral service at Arlington National Cemetery in Arlington, Va., Wednesday, July 28, 2010. Miller was killed in Afghanistan June 21.
The casket of Army Pfc. David T. Miller is carried during his funeral service at Arlington National Cemetery in Arlington, Va., Wednesday, July 28, 2010. Miller was killed in Afghanistan June 21.   (AP Photo/Susan Walsh)
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COMMENTS
Showing 3 of 61 comments
Alan
Jul 31, 2010 9:09 AM CDT
A private insurance company putting its own fiancial interests ahead of those of their clients? SHOCKING!!
Even-Steven
Jul 30, 2010 4:06 PM CDT
What's this, greed in America? Shut yo mouth! Nothing will happen to them though. They probably are spending some of that money on our elected officials re-election campaigns; both Douchocrats and Republitards. Hope there is a special spot in hell for these types.
lukes72
Jul 30, 2010 7:53 AM CDT
Lets not forget veterans kill people and be carefull how you treat them as they may turn on you these people fight for our country they should get better rates and benifites than our leaders and bankers i dont see them fighting for our freedom they only fight to financially personally prosper thanks SAM Eagle

 
military families • life insurance • Prudential Financial • MetLife

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