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Fallen Soldiers' Families Denied Cash as Insurers Profit

Hicup

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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.

Link to story

Ok, so I read the whole story. I suggest everyone who's interested do so as well.

The crux of the issue is this. Apparently insurance companies are making a profit off their beneficiaries. In some ways, I don't mind this, but its the way it is all going down that I dislike. The method in which they do it is sneaky, almost to the point of scheme-ish, maybe even predatory.

What are your thoughts?

Should FULL, in plain sight disclosure, be regulated?

Tim-
 
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Hicup

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Thanks, that's weird it worked the first time. :)

Tim-
 

MaggieD

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Excerpt -

Ok, so I read the whole story. I suggest everyone who's interested do so as well.

The crux of the issue is this. Apparently insurance companies are making a profit off their beneficiaries. In some ways, I don't mind this, but its the way it is all going down that I dislike. The method in which they do it is sneaky, almost to the point of scheme-ish, maybe even predatory.

What are your thoughts?

Should FULL, in plain sight disclosure, be regulated?

Tim-

Many insurance companies have been doing this for years. It's actually in the fine print. Who reads that?? I think it's sneaky; but all she has to do is write one check for the entire amount in the account and deposit it where she wishes. If the insurance company got real lucky, she'da died before she tried to access it and the checkbook would have been misplaced so her heirs wouldn't get it either. There is no national database for unclaimed insurance proceeds.

Insurance companies, both with their policies and their annuities, make a significant amount of money by not paying earned benefits. Health...life...disability -- the longer the wait, the longer they use OPM.
 

Lord Tammerlain

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What the insurance company should have reviled is that the money was not in an interest bearing account.

That the company made money from the payout is not an issue as banks make money as well from deposits
 

Harry Guerrilla

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Excerpt -

Ok, so I read the whole story. I suggest everyone who's interested do so as well.

The crux of the issue is this. Apparently insurance companies are making a profit off their beneficiaries. In some ways, I don't mind this, but its the way it is all going down that I dislike. The method in which they do it is sneaky, almost to the point of scheme-ish, maybe even predatory.

What are your thoughts?

Should FULL, in plain sight disclosure, be regulated?

Tim-

Ok, so I understand that the woman lost her son.
Totally get that she didn't want to read all the info immediately.

There comes a point that you have to read it all.
The story was kinda dishonest about interest rates, money market rates are slightly above what she was getting, not 1%
1/4th a point to be exact.

Also banks do the exact same thing with your deposits regardless of where the money came from.

If it were me I'd deposit the money in my bank account and forget the insurance company.

Seriously folks, Read the fine print.
Always read the fine print on everything that has to do with your money.


Edit: I was wrong the Jumbo MMA rate is a little above 1%.
 
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