Active Duty and Retired Military – Check Your VA Life Insurance

by Chuck on December 22, 2010 · 0 comments

I just learned of this from a friend:

According to Bloomberg

,

The U.S. Department of Veterans Affairs failed to inform 6 million soldiers and their families of an agreement enabling Prudential Financial Inc. to withhold lump-sum payments of life insurance benefits for survivors of fallen service members, according to records made public through a Freedom of Information request.

The amendment to Prudential’s contract is the first document to show how VA officials sanctioned a payment practice that has spurred investigations by lawmakers and regulators. Since 1999, Prudential has used so-called retained-asset accounts, which allow the company to withhold lump-sum payments due to survivors and earn investment income on the money for itself.

The Sept. 1, 2009, amendment to Prudential’s contract with the VA ratified another unpublicized deal that had been struck between the insurer and the government 10 years earlier — one that was never put into writing, Bloomberg Markets magazine reports in its November issue. This verbal agreement in 1999 provoked concern among top insurance officials of the agency, the documents released in the FOIA request show.

For a decade, until the contract was formally changed, Prudential wasn’t fulfilling its obligations to survivors of fallen service members, says Brendan Bridgeland, an insurance lawyer who runs the non-profit Center for Insurance Research in Cambridge, Massachusetts.

What is unclear is whether or not the issue has been rectified.  Knowing the Feds, it might not have.  With that in mind, I advise all active duty and retired military having life insurance through the VA that is underwritten by Prudential to check with their VA advisors on the status of their life insurance payout in the event the unthinkable were to occur.

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