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-   -   Insurance company profits from death of veterans. (http://www.pirate4x4.com/forum/general-chit-chat/911078-insurance-company-profits-death-veterans.html)

Haole 08-18-2010 05:04 PM

Insurance company profits from death of veterans.
 
Pointing out the misleading title of the article so Gary and CJHeap won't argue about it.

It's a long story, it should piss you off.

Cliff notes: Insurance companies pocket interest on death benefits rather than allowing the beneficiaries have it.

Fallen Soldiers' Families Denied Cash as Insurers Profit

http://www.bloomberg.com/news/2010-0...st-profit.html

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.”

No FDIC Insurance

The company’s letter omits that the money is in MetLife’s corporate investment account, isn’t in a bank and has no FDIC insurance.

“All guarantees are subject to the financial strength and claims-paying ability of MetLife,” it says.

Both MetLife, which handles insurance for nonmilitary federal employees, and Prudential paid 0.5 percent interest in July to survivors of government workers and soldiers. That’s less than half of the rate available at some banks with accounts insured by the FDIC up to $250,000.

Bank of New York Mellon Corp. handles the paperwork and monthly statements for customers with MetLife “checking accounts.” The insurance company, not the bank, most recently reported holding about $10 billion in death benefits, in 2008.

The “checkbook” system cheats the families of those who die, says Jeffrey Stempel, an insurance law professor at the William S. Boyd School of Law at the University of Nevada, Las Vegas, who wrote ‘Stempel on Insurance Contracts’ (Aspen Publishers, 2009).

‘Bad Faith’

“It’s institutionalized bad faith,” he says. “In my view, this is a scheme to defraud by inducing the policyholder’s beneficiary to let the life insurance company retain assets they’re not entitled to. It’s turning death claims into a profit center.”

Prudential’s Alliance Account is helpful to families of soldiers, says company spokesman Bob DeFillippo.

“For some families, the account is the difference between earning interest on a large amount of money and letting it sit idle,” he says. Prudential follows the law, he says.

“We fully and regularly disclose the nature and terms of the account to account holders,” DeFillippo says. “We make it clear that the money can be withdrawn at any time by simply writing a draft.”

Metlife spokesman Joseph Madden says his company’s customers are very happy with the Total Control Account.

‘Overwhelmingly Positive’

“The feedback from TCA customers has been overwhelmingly positive,” he says. “The TCA affords beneficiaries security, peace of mind and time to make an informed decision -- while earning interest in the interim.”

Madden says the company was paying some survivors 0.5 percent in July while some others got 1.5 percent or 3 percent, depending on the age and origin of insurance accounts. The accounts don’t violate any laws, Madden says, and are authorized by New York state insurance law.

Insurers are holding onto at least $28 billion owed to survivors, according to three firms that handle retained-asset accounts for about 130 life insurance companies. There are no public records showing how much companies are holding in these accounts.

The “checks” that Cindy Lohman wrote, the ones rejected by retailers, were actually drafts, or IOUs, issued by Prudential. Even though the “checks” had the name of JPMorgan Chase & Co. on them, Lohman’s funds weren’t in that bank; they were held by Prudential.

Federal Bank Law

Before a check could clear, Prudential would have to send money to JPMorgan, bank spokesman John Murray says.

Insurance companies -- in addition to holding onto the money of survivors, paying them uncompetitive interest rates and giving them misleading guarantees -- may be violating a federal bank law. A 1933 statute makes it a felony for any company to accept deposits without state or federal authorization.

That means only banks or credit unions can accept deposits, says Arthur Wilmarth, a professor at George Washington University Law School in Washington who has testified before Congress about banking regulations.

If a prosecutor pressed an insurance company, retained- asset accounts could be outlawed because insurers say they deposit money into these accounts and don’t have bank charters or banking regulation, Wilmarth says. MetLife also offers its own version of certificates of deposit.

“If it swims, quacks and flies like a duck, the court could decide that it is indeed a duck,” he says. “You then potentially could have a criminal violation.”

Potential Bank Run

This unregulated quasi-banking system operated by insurers has none of the protections of the actual banking system. Lawrence Baxter, a professor at Duke University School of Law in Durham, North Carolina, says the potential exists for a catastrophe.

If one insurer is unable to meet its obligations on retained-asset accounts, people could lose faith in other companies and demand immediate payment, triggering a panic, says Baxter, who has consulted with federal agencies on financial regulation.

The government established the FDIC in 1933 after frantic depositors tried to pull their money from banks. The federal government has no such program for death-benefit accounts.

“There’s more than $25 billion out there in these accounts,” Baxter says. “A run could be triggered immediately by one insurance company not being able to honor its payout. The whole point of creating the FDIC was to put an end to bank runs.”

No Federal Regulation

The sweeping financial regulatory legislation signed by President Barack Obama on July 21 doesn’t address retained-asset accounts. It creates a new federal insurance office, which won’t be a regulator. It will collect information, monitor the industry for systemic risk and consult with state insurance regulators.

An industry with $19.1 trillion in potential liabilities will remain unregulated by the federal government. In 2008, insurers approved claims totaling $60 billion in death benefits, according to the life insurance council.

The federal government doesn’t even regulate the life insurance it supplies, via MetLife, to its own employees in a program called Federal Employees’ Group Life Insurance. As the VA does for soldiers, the U.S. Office of Personnel Management sends handbook to nonmilitary government workers -- some 4 million active employees and retirees.

The handbook says their life insurance policies automatically pay out death benefits in the form of a “money- market-account checkbook.” The 217-page handbook omits that the money isn’t FDIC insured and will stay with MetLife until someone writes a “check.”

‘Unfair Advantage’

This lack of disclosure is unconscionable, says Harvey Goldschmid, a commissioner of the U.S. Securities and Exchange Commission from 2002 to 2005.

“I can’t imagine why bank regulators haven’t been requiring a prominent ‘no FDIC insurance’ disclosure,” says Goldschmid, who’s now a law professor at Columbia University in New York. “This system works very badly for the bereaved. It takes unfair advantage of people at their time of weakness.”

The closest relative to retained-asset accounts may be money-market mutual funds, which are pools of cash invested in short-term debt securities.

Money Market Rules

The SEC requires fund companies to warn investors that money market funds don’t have FDIC insurance. It also mandates that fund managers provide a prospectus, that they invest in specific types of safe debt and that they post a detailed schedule of their investments monthly on their websites.

Insurers’ retained-asset accounts have none of those regulatory protections.

A June 2009 MetLife standard condolence letter to survivors leaves out that accounts aren’t in a bank and aren’t federally insured. In June 2010, 25 years after MetLife invented retained- asset accounts, the company released a customer agreement that does disclose that retained assets aren’t in a money market account nor in a bank and that they have no FDIC insurance.

“The assets backing the Total Control Accounts are maintained in MetLife’s general account and are subject to MetLife’s creditors,” the agreement says. That language contradicts the federal employee handbook, which says survivors get a money market account.

Gerry Goldsholle, the man who invented retained-asset accounts, says MetLife makes $100 million to $300 million a year from investment returns on the death benefits it holds. A former president of MetLife Marketing Corp., Goldsholle, 69, devised the accounts in 1984. He’s now a lawyer in private practice in Sausalito, California.

‘This Is Crazy’

Goldsholle says he pondered the billions of dollars of death-benefit proceeds the company paid out each year.

“I looked at this and said this is crazy,” says Goldsholle, who left the firm in 1991. “What are we doing to retain some of this money? It’s very expensive to bring money in the front door of an insurance company. You’re paying very large commissions and sales expenses.”

So he came up with a way for MetLife to hold onto death benefits.

“The company would win because we would make a nice spread on the money,” Goldsholle says, while customers would earn interest on their accounts. MetLife, he says, can earn 1 to 3 percentage points more from its investment income -- mostly from bonds -- than it pays out to survivors.

Misconceptions

The accounts Goldsholle invented have spread much faster than the ability of state regulators to track them -- or even to understand how they work. Ted Hamby, North Carolina’s deputy insurance commissioner for life and health, says he believes retained-asset accounts have FDIC protection.

“Whatever money is on deposit in that checking account will be insured, up to the limits of the FDIC,” he says. He’s wrong. No retained-asset accounts have FDIC coverage.

In Connecticut, where 106 insurance companies are based, state insurance department manager for market conduct Kurt Swan also says that retained-asset accounts are kept in banks, with FDIC coverage.

“I think they’re just trying to offer some flexibility to the beneficiary,” he says. Swan and his colleague, William Arfanis, the department’s principal financial examiner, both say the insurers don’t profit from the retained-asset accounts. That too is wrong. The companies do earn investment gains on death benefits.

Some Rules

Just six states had any rules for retained-asset accounts as of July 2009, according to the National Association of Insurance Commissioners. Arkansas, Colorado, Kansas, Nevada, North Carolina and North Dakota require insurers to disclose fees and interest rates and to tell survivors they may withdraw all of the money by writing a single check.

Maryland, which isn’t on the NAIC list, also has rules.

Pennsylvania Insurance Commissioner Joel Ario, whose state has no rules for retained-asset accounts, says he has asked his staff to prepare a regulation forbidding insurance companies from using such accounts as the default method of paying a death claim.

“I haven’t heard a plausible argument about why these accounts are better for the consumer,” Ario says.

If state insurance regulators have paid scant attention to retained-asset accounts, state bank regulators have taken an even more hands-off approach.

‘Not Drawn Attention’

“Quite honestly, we deal with issues that our members want us to deal with,” says Michael Stevens, senior vice president for regulatory policy at the Washington-based Conference of State Bank Supervisors. “This is not one that has drawn their attention.”

Three companies have not only noticed but have also profited by handling retained-asset accounts for insurers. Open Solutions Inc., based in Glastonbury, Connecticut, oversees 400,000 accounts for 67 insurance companies.

Open Solutions sends out “checkbooks,” prints periodic statements and computes accrued interest for accounts with total deposits of $10 billion, says Jay Woldar, director of sales and account management at Open Solutions.

One of its competitors, Bank of New York Mellon, administers more than 500,000 retained-asset accounts holding a total of $14 billion, including MetLife’s retained assets. Chicago-based Northern Trust Corp. handles about $4 billion in 125,000 accounts, spokesman John O’Connell says.

Survivors generally don’t touch these accounts immediately.

Accounts Stay Opened

“About 40 percent of the money stays in for more than a year,” Woldar says. Insurers can have use of survivors’ money for years, even decades, says Randi Lichtenstein, a product line manager at Bank of New York.

“They can stick around for quite a while,” she says. “There are accounts that all insurance companies have on these platforms that go back 10, 15, 20 years.”

MetLife’s Madden says most of its customers’ retained-asset accounts are closed within one year. About 28 percent of survivors of soldiers and veterans keep their retained-asset accounts open for more than two years, the VA says.

During a routine audit completed in 2004, the New York State Insurance Department found that 1,476 retained-asset accounts, worth a total of $33.5 million, at Hartford, Connecticut-based Phoenix Life Insurance Co., had been dormant for more than three years.

In New York, funds in an account that remains dormant for more than three years may be turned over to the state. Phoenix spokeswoman Alice Ericson says the company now has a policy of sending letters to people whose accounts have been inactive for two years.

Inactive Accounts

Almost one-third of the 6,890 retained-asset accounts run by Mony Life Insurance Co. were inactive for more than three years, New York auditors found in 2002. Mony is now owned by Axa SA, Europe’s second-largest insurer by market value.

A few people have sued insurers over the use of retained- asset accounts. Prudential won a lawsuit in 2009 in which a survivor complained about the Alliance Account. MetLife has a case pending in which a survivor says that she was cheated by the retained-asset account. In court-filed papers, MetLife denies any wrongdoing.

There has been only one ruling by a federal appellate court on the substance of such accounts -- and it went against an insurance company.

After a federal judge in Boston dismissed a policyholder suit claiming that Chattanooga, Tennessee-based insurer Unum Group was stealing account earnings from survivors, the U.S. Court of Appeals for the First Circuit overruled the lower court in 2008. It reinstated the case.

‘Euphemistically Named’

“The euphemistically named ‘Security Account,’ accompanied with a checkbook, was no more than an IOU which did not transfer the funds to which the beneficiaries were entitled out of the plan assets,” the three-judge panel wrote.

Unum spokeswoman Mary Clarke Guenther says retained-asset accounts are a commonly accepted practice in the industry. The case is pending.

Absent regulatory or legal intervention, bereaved family members like Cindy Lohman will continue to find death benefits going into retained-asset accounts. Her son, Ryan, posthumously received a Purple Heart and Bronze Star Medal for sacrificing his life to save fellow soldiers in Afghanistan in August 2008.

He had ordered a Humvee to swerve to avoid an explosive device, exposing himself to its deadly blast.

‘Accept The Reality’

Three days after learning of her son’s death, Lohman says, an Army casualty assistance officer came to her home, explaining that Ryan had a life insurance policy and that her signature was needed to release the money.

“By signing that, it forced me to accept the reality that he was dead and not coming back,” she says.

Since 1999, the VA has allowed Prudential to send survivors “checkbooks” tied to its Alliance Account. In 2009 alone, the families of U.S. soldiers and veterans were supposed to be paid death benefits totaling $1 billion immediately, according to their insurance policies. They weren’t.

Prudential’s VA policies promise either a lump sum payout or 36 monthly payments. About 90 percent of survivors, including Lohman, choose to receive the full amount upfront. When they do, they don’t get a check; they get a “checkbook.”

Under a 2008 law, survivors covered by Prudential’s VA policy are allowed one year to put death benefits into a Roth IRA, allowing them to earn investment gains for the rest of their lives tax-free. Prudential never informed Lohman, she says.

‘If They Had Told Me’

“I definitely would have done that if they had told me,” Lohman says.

Even Stephen Wurtz, deputy assistant director for insurance at the VA, who has overseen the insurance program for 25 years, has been kept in the dark by Prudential.

“Prudential runs the program on a cost-reimbursement basis only,” he initially said, referring to the $4.2 million in fees the VA paid Prudential in 2009. “They’re really good guys. They do it patriotically. They don’t make any money from the Alliance Account.”

Wurtz, 62, said he had believed that the Alliance Account money went into a bank. After he learned that the payouts actually stayed in Prudential’s general fund, Wurtz says, he asked Prudential how much money the insurance company made from these accounts and how many dollars it held in retained assets.

Prudential declined to answer, saying that information was proprietary, Wurtz says.

‘Maybe I Didn’t’

Prudential, which has had the insurance contract with the VA since 1965, pitched the checkbook payout to the VA in 1999 as an added benefit to survivors, Wurtz says. The government agency accepted Prudential’s offer, he says.

“Maybe I didn’t ask enough questions,” he says.

Printed on each “check,” next to “Prudential’s Alliance Account” is the name of JPMorgan, the second-biggest U.S. bank by assets. JPMorgan spokesman Murray declined to say how much the bank is paid for its role with Prudential.

The way Prudential has set up the “checks” implies that JPMorgan stands behind the accounts and that they are thus backed by the FDIC, Duke’s Baxter says.

“That’s misleading the beneficiaries,” he says.

“We disclose the roles of all companies involved in administering these accounts,” Prudential’s DeFillippo says. JPMorgan’s Murray declined to comment.

Prudential’s general account earned 4.4 percent in 2009, mostly from bond investments, according to SEC filings. The company has paid survivors 0.5 percent in 2010.

‘It’s Shameful’

“It’s shameful that an insurance company is stealing money from the families of our fallen servicemen,” says Paul Sullivan, who served in the 1991 Gulf War as an Army cavalry scout and is now executive director of Veterans for Common Sense, a nonprofit advocacy group based in Washington. “I’m outraged.”

Sullivan, a project manager at the VA’s benefits unit from 2000 to 2006, says he was never told Prudential kept money and earned investment gains from soldiers’ insurance payouts instead of sending it to survivors.

“There shouldn’t be secret profits,” he says. “This should be transparent. The lack of oversight is appalling.”

It’s not much different for the 4 million nonmilitary U.S. government employees and retirees -- including staff of the FDIC -- covered by MetLife policies. That program, begun in 1965, averages more than $2 billion in death benefits claimed every year, the government says.

Payouts are handled by the Office of Federal Employees’ Group Life Insurance. That makes it look like the government is taking care of its employees’ insurance coverage. It isn’t. That “office” is a unit of MetLife.

MetLife Holds the Money

Edmund Byrnes, a spokesman for the Office of Personnel Management, which oversees MetLife’s federal employee contract, says MetLife segregates death benefits into beneficiary accounts after it approves death claims.

“Once MetLife transfers the funds to the Total Control Account, the monies are no longer under MetLife’s control,” Byrnes says.

MetLife spokesman Madden says something different.

“The assets that back the liabilities on all the TCAs are placed in MetLife’s general account,” he says.

Back at the Veterans Affairs office, Deputy Assistant Director Wurtz, who’s a civilian employee, says he now understands for the first time that since he’s covered by the federal insurance program, his own wife could receive a MetLife “checkbook” someday.

‘Ripping Off Their Own’

“Uncle Sam is ripping off their own,” Wurtz says. “My wife would get the money, and they would blood-suck some of it out of her.”

It took Wurtz, who’s been working with insurers for most of his career, more than a decade to understand how retained-asset accounts work. Companies like MetLife and Prudential have never told millions of Americans with insurance policies that when they die, the insurer plans to hold their family’s money in its own account to make investment gains from the death benefit.

“It’s outrageous that somebody’s profiting off other people’s grief,” says Mark Umbrell of Doylestown, Pennsylvania. His 26-year-old son, Colby, an Army Airborne Ranger who earned a Bronze Star and a Purple Heart, was killed in Iraq in May 2007. Umbrell was among those who got a “checkbook” account.

“I think we’re being taken,” he says.

The question for Umbrell, Lohman and a million others with these accounts is whether anything will change. State bank regulators say if there are to be any reforms, they should be made by insurance departments. Officials at those state agencies often say they don’t even understand what a retained-asset account is.

“It’s flown under the radar,” professor Stempel says. “Regulators have not done their job.”

Until public officials wake up, the bereaved will remain a secret profit center for the life insurance industry.

To contact the reporter on this story: David Evans in Los Angeles at davidevans@bloomberg.net.

jpfaris 08-18-2010 05:29 PM

Damn. I tried to read it all, and I may, eventually.

But, for the love of Pete, NOBODY FORCES THEM to leave the money there. If they are not happy with the ROI, then they should move it to a bank.

Personally, I have seen it as common practice for an Agent delivering a death check to immediately offer and encourage an annuity if the benificiary has no plan for the money.

I can't find any sympathy for someone that didn't care about the fine print associated with her $400,000.

Bondage 08-18-2010 05:50 PM

Quote:

Originally Posted by jpfaris (Post 11782891)
Damn. I tried to read it all, and I may, eventually.

But, for the love of Pete, NOBODY FORCES THEM to leave the money there. If they are not happy with the ROI, then they should move it to a bank.

I agree

Personally, I have seen it as common practice for an Agent delivering a death check to immediately offer and encourage an annuity if the benificiary has no plan for the money.

Happens far too often, scum sucking dirtbags.

I can't find any sympathy for someone that didn't care about the fine print associated with her $400,000.


If the agent/planner explains so that a bene can make an informed decision and they do nothing, oh well.

rockota 08-18-2010 06:10 PM

B.
F.
D.

Muddy Oval 08-18-2010 06:46 PM

Most people don't want to deal with the money right away in most cases. They think of it as 'blood money' or have guilt associated with receiving it. Been there.
It's just as bad as when the funeral directors stick it to people for $5K caskets instead of $1K caskets when all the victims can think about is they just lost a loved one. I had a relative donate a seven figure settlement to charity when his son died- didn't keep a dime, and went back to work.
On the other side of the arguement- once one settles down and wants to do something with the settlement, all one has to do is write that check out and deposit wherever he/she wants.

A_G 08-19-2010 04:31 AM

Quote:

Originally Posted by Muddy Oval (Post 11783150)
Most people don't want to deal with the money right away in most cases. They think of it as 'blood money' or have guilt associated with receiving it. Been there.
It's just as bad as when the funeral directors stick it to people for $5K caskets instead of $1K caskets when all the victims can think about is they just lost a loved one. I had a relative donate a seven figure settlement to charity when his son died- didn't keep a dime, and went back to work.
On the other side of the arguement- once one settles down and wants to do something with the settlement, all one has to do is write that check out and deposit wherever he/she wants.

Yea thats what happened when my buddy died.

Unfortunately the benefeciarie change paperwork never got updated in there system, so his parents got it instead of his widow, who payed for everything and still paying med bills two years later.

ItsaCJ6 08-19-2010 04:57 AM

I see no problem with them making interest on what they hold on to. I think they should be more informative as to how to get the money and where it is.

Could be the gal in the article was told this and just didn't understand. This is not to say, that insurance companies aren't shady.

Muddy Oval 08-19-2010 05:00 AM

Quote:

Originally Posted by A_G (Post 11784235)
Yea thats what happened when my buddy died.

Unfortunately the benefeciarie change paperwork never got updated in there system, so his parents got it instead of his widow, who payed for everything and still paying med bills two years later.

Same thing happened to me- I got medical bills, first wife's parents got rich.

usmcdoc14 08-19-2010 05:12 AM

Quote:

Originally Posted by jpfaris (Post 11782891)
But, for the love of Pete, NOBODY FORCES THEM to leave the money there. If they are not happy with the ROI, then they should move it to a bank.

I can't find any sympathy for someone that didn't care about the fine print associated with her $400,000.

my problem is no one knows about this shit :eek: fuck, I am active military and I did not know the details about this shit. No one in my office knew this shit, my Chief did not know this shit, even fucking PSD does not know this shit. My form says "lump sum", not "witheld" or "distributable by checks", lump sum.
I guess the assumption of "here is a SINGLE check for $400k ma'am, sorry for your loss" was way the fuck off the mark.
This is also not known by decedent affairs, now I have to know the EXACT details of this shit so I can better inform my sailors.

Muddy Oval 08-19-2010 09:24 AM

It's a single check if you write it. Apparently they leave that option open. FWIW, I don't think it's a bad thing other than people aren't really in a frame of mind to deal with the details at the time it all comes up. To me, this seems better than "Here's a check for your dead family member."

jpfaris 08-19-2010 09:36 AM

Quote:

Originally Posted by Muddy Oval (Post 11784708)
It's a single check if you write it. Apparently they leave that option open. FWIW, I don't think it's a bad thing other than people aren't really in a frame of mind to deal with the details at the time it all comes up. To me, this seems better than "Here's a check for your dead family member."

AND,

if they were given a single check, they would just have to deal with the exact same circumstances at a financial institution of their choice.

This is yet another example of people trying to make the Insurance Industry look like the bad guys.

Travis Waldher 08-19-2010 09:41 AM

Quote:

Originally Posted by usmcdoc14 (Post 11784281)
my problem is no one knows about this shit :eek: fuck, I am active military and I did not know the details about this shit. No one in my office knew this shit, my Chief did not know this shit, even fucking PSD does not know this shit. My form says "lump sum", not "witheld" or "distributable by checks", lump sum.
I guess the assumption of "here is a SINGLE check for $400k ma'am, sorry for your loss" was way the fuck off the mark.
This is also not known by decedent affairs, now I have to know the EXACT details of this shit so I can better inform my sailors.

I'll admit, I never read the article all the way through. I was going crosseyed.

But was something stopping her from just pulling the funds out completely and putting them somewhere else?

StuartTX 08-19-2010 09:44 AM

I only read the first 1/4 of the OP. It's pretty naive to blame the insurance company for earning interest from money that's just sitting in the bank. If they are paying her 1% she should be happy to be earning more than most of the checking accounts in the world today. Secondly, we all profit from the deaths of soldiers. The sacrifice that her son made ensures the strength and security of our whole union and economy. We all reap the benefits afforded to us by sailors, soldiers, Marines, Airmen and Coast Guardsmen.

jpfaris 08-19-2010 09:46 AM

Quote:

Originally Posted by Travis Waldher (Post 11784791)
I'll admit, I never read the article all the way through. I was going crosseyed.

But was something stopping her from just pulling the funds out completely and putting them somewhere else?

She had a checkbook, but would have to inform the insurance company to transfer the money into the bank account first. So make a phone call, write a check. Nothing major. I imagine that someone who didn't need the money for something immediate would probably have it put into some type of investment vehicle that would require a lot more to access the money, not to mention penalties.

usmcdoc14 08-19-2010 10:31 AM

Quote:

Originally Posted by Travis Waldher (Post 11784791)
I'll admit, I never read the article all the way through. I was going crosseyed.

But was something stopping her from just pulling the funds out completely and putting them somewhere else?

Quote:

Originally Posted by jpfaris (Post 11784812)
She had a checkbook, but would have to inform the insurance company to transfer the money into the bank account first. So make a phone call, write a check. Nothing major. I imagine that someone who didn't need the money for something immediate would probably have it put into some type of investment vehicle that would require a lot more to access the money, not to mention penalties.

To be honest I don't care what fine print that lady got, she is not the one who started the policy. Nor do I care what my benifactor does with the money. They can buy a firetruck full of hookers or they can invest it, matters not to me.

But I am the one that stated in what form they get thier payment.

Myself and thousands of other signed paperwork that states "lump sum", not "check book", not "our withholdings" and not "to disperse through another banking institution after our transfer from your available funds" :shaking: Single payment with no other made up options.

When you win the lottery and you ask for a lump sum does the lotto give you a check book?

I did not sign for an insurance company to be the holder of my cash for any time or duration. The funds are to be removed from thier account, placed in the form of one big fat check and mailed to the person I say to.

Bondage 08-19-2010 03:21 PM

Quote:

Originally Posted by jpfaris (Post 11784766)
AND,

if they were given a single check, they would just have to deal with the exact same circumstances at a financial institution of their choice.

This is yet another example of people trying to make the Insurance Industry look like the bad guys.

As a long time member of the industry, "we" have the reputation we deserve.

I actually have a pretty good reputation with clients and the various regulatory bodies. Mostly because I won't hesitate to skullfuck anyone doing questionable things in my field. There's a few in the business that wish I was selling shoes but fuck them. Its bad enough that the institutions market such crap that the average consumer doesn't know how to think about their situation, they just hand their money(problems) to some guy at a bank who's job is to generate a profit for shareholders, if anything goes the clients way its merely good luck, not intent. Why do you think people like Dave Ramsey hold such sway? People are so desperate for answers and so distrusting they'll take formulaic pap over an individual plan.

Until "we" do a better job of policing ourselves fingers will continue to be pointed and distrust will fester.

4runner 08-19-2010 08:08 PM

so what good is their checkbook if no one will accept the checks?



sounds fishy, what are they drawn with crayons?

Haole 08-21-2010 12:51 AM

Quote:

Originally Posted by usmcdoc14 (Post 11785050)
To be honest I don't care what fine print that lady got, she is not the one who started the policy. Nor do I care what my benifactor does with the money. They can buy a firetruck full of hookers or they can invest it, matters not to me.

But I am the one that stated in what form they get thier payment.

Myself and thousands of other signed paperwork that states "lump sum", not "check book", not "our withholdings" and not "to disperse through another banking institution after our transfer from your available funds" :shaking: Single payment with no other made up options.

When you win the lottery and you ask for a lump sum does the lotto give you a check book?

I did not sign for an insurance company to be the holder of my cash for any time or duration. The funds are to be removed from thier account, placed in the form of one big fat check and mailed to the person I say to.

Ding. Someone gets it. Someone that signed on the dotted line.

nuclearjunky 08-21-2010 10:06 AM

How are they keeping this money and reporting it on their books is what I want to know? How do they show a 400,000 payment while keeping said money and earning 4.8% while paying jack shit to the beneficiary? The whole thing reeks of Enron to me.

jpfaris 08-27-2010 05:41 AM

Quote:

Originally Posted by usmcdoc14 (Post 11785050)
To be honest I don't care what fine print that lady got, she is not the one who started the policy. Nor do I care what my benifactor does with the money. They can buy a firetruck full of hookers or they can invest it, matters not to me.

But I am the one that stated in what form they get thier payment.

Myself and thousands of other signed paperwork that states "lump sum", not "check book", not "our withholdings" and not "to disperse through another banking institution after our transfer from your available funds" :shaking: Single payment with no other made up options.

When you win the lottery and you ask for a lump sum does the lotto give you a check book?

I did not sign for an insurance company to be the holder of my cash for any time or duration. The funds are to be removed from thier account, placed in the form of one big fat check and mailed to the person I say to.

I kinda see your point, but still disagree. The argument of wether a check for $400,000 or a checking account with $400,000 in it is better, is subjective. Here's the way I see it. If you put all the bias aside, the Ins Co may actually have been trying to help the beneficiary. Do you think the lady in the article could have walked into the store and bought a bed with a check for $400,000? What you are forgetting is that in order for your beneficiary to spend one penny of that money, something will have to be done to break it down to smaller amounts with easier access. I think making a phone call is a pretty easy step for most folks. The alternative is researching, and meeting with advisors/investors, and finding an investment vehicle that works for what you want. (and if you plan on buying small items, it's probably gonna be some type of money market account, a CHECKBOOK)

As far as the whole "they're making money on the interest" argument, yeah so what. They make interest up until the point that $400,000 check is cashed too. Always been that way. At some point the beneficiary has to take control of that money.

The point is that it may not be EXACTLY the way you planned it, but there is no ill intent or subtrafuge going on here.

CJHeap 08-27-2010 05:53 AM

Quote:

Originally Posted by A_G (Post 11784235)
Yea thats what happened when my buddy died.

Unfortunately the benefeciarie change paperwork never got updated in there system, so his parents got it instead of his widow, who payed for everything and still paying med bills two years later.

Did he contest the estate? Those bills should have been paid before anyone got the check. He should get the hospitals involved and let them go after the parents.

Quote:

Originally Posted by Muddy Oval (Post 11784266)
Same thing happened to me- I got medical bills, first wife's parents got rich.

Read above.

Quote:

Originally Posted by usmcdoc14 (Post 11785050)
To be honest I don't care what fine print that lady got, she is not the one who started the policy. Nor do I care what my benifactor does with the money. They can buy a firetruck full of hookers or they can invest it, matters not to me.

But I am the one that stated in what form they get thier payment.

Myself and thousands of other signed paperwork that states "lump sum", not "check book", not "our withholdings" and not "to disperse through another banking institution after our transfer from your available funds" :shaking: Single payment with no other made up options.

When you win the lottery and you ask for a lump sum does the lotto give you a check book?

I did not sign for an insurance company to be the holder of my cash for any time or duration. The funds are to be removed from thier account, placed in the form of one big fat check and mailed to the person I say to.

If you are dead, it really does not matter now does it. They gave the woman a choice of writing one big check to cash, deposit or wipe her ass with. If she failed to do that, it is no different than if they sent her a check and she did not cash it. The money is still in their account.

a360chief 08-27-2010 06:08 AM

Quote:

Originally Posted by usmcdoc14 (Post 11784281)
my problem is no one knows about this shit :eek: fuck, I am active military and I did not know the details about this shit. No one in my office knew this shit, my Chief did not know this shit, even fucking PSD does not know this shit. My form says "lump sum", not "witheld" or "distributable by checks", lump sum.
I guess the assumption of "here is a SINGLE check for $400k ma'am, sorry for your loss" was way the fuck off the mark.
This is also not known by decedent affairs, now I have to know the EXACT details of this shit so I can better inform my sailors.

She was given a lump sum and elected to leave it in an account rather than dealing with it as a lump sum. If she had taken a check for $400K to the bank & dumped it in a checking account for up to a year without touching, how would it be different? What interest rate does the average checking account draw right now? This was mentioned before, so I am repeating it for clarity.

Your or that department's failure to know the EXACT details falls on you and them, from my seat. I am sure it is in the papers somewhere. It may be shady ( but not really) but the decision was her's. Sounds like Decedent Affairs fails miserably in assisting the survivors in situations like this.

I like how even though this is a wide insurance practice, the writer and poster pump up the military aspect for added tear-jerkiness and oprahfication. A-hoale CHOSE to use that title here in C/C: no one made him. I do not see the rule that linked articles must use the article title as the thread name? Fail, even with the cutesy lil' disclaimer....

To repeat for those that cannot get it: she WAS given a lump sum. Would you want them to bring it in rolls of pennies instead of a check, or checkbook? :shaking: I don't know of any insurance company that brings cash, apparently the only thing some can picture as a "lump sum." She HAD the option of dumping "one big fat check" into her account...it is plain as day.

EDIT: Do morons not realize that banks/insurance companies/etc... ALL make money on YOUR deposits? Seriously? Who is that naive to thank that your personal money sits in a drawer somewhere waiting for you to pick it up? If they made 4.8% on an account they did it by being dang lucky/good on the investments. When my mom died in '03, she had various policies from retirement, etc... EVERY COMPANY WANTED US TO KEEP THE MONEY WITHIN THAT COMPANY TO INVEST OR WHATEVER! And my dad losing his wife was no less traumatic than a mother losing her son. Unfortunately, dealing with life insurance payouts usually only occurs (try to keep up here) after someone dies and the survivors are not in the best frame of mind.

IrnGynt 08-27-2010 06:15 AM

Quote:

Originally Posted by usmcdoc14 (Post 11785050)
Myself and thousands of other signed paperwork that states "lump sum", not "check book", not "our withholdings" and not "to disperse through another banking institution after our transfer from your available funds" :shaking: Single payment with no other made up options.

The beneficiary makes that decision. They sign a statement as to how they want the money handled. Cutting them a check or having the insurance company deposit it into an interest bearing account are two options.

There's really nothing nefarious about this. The media is making hay with this.

I work for an insurance company that caters to the military. We offer the same two options BUT if the beneficiary chooses not to receive a check we deposit the money into a real money market account that is FDIC insured. It pays less then 1% interest though.

The point of the money market is to allow the beneficiary some time to make educated decisions about what they're going to do with the money. Keeping it in there for more then a month or two is not one of the best decisions.

CaryW 08-27-2010 06:24 AM

Just went over all of this fine print last nite with a friend of mine about her dads life insurance. He was a retired postmaster.

Up to 5k will either be direct deposited in the account that regular pay was put in or you can request a paper check

Over 5k goes to a Money Market checking acct.

Goofy woman didnt figure that the life insurance policy was worth much since her dad didnt worry about things like that.

Uhh ,he chose option B with a 3x multiplier which is way over 100k.


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