Veterans Affairs looks into soldiers’ death benefits
WASHINGTON — The Department of Veterans Affairs said Wednesday that it is conducting a “full investigation” into a report that life insurance companies are putting veterans’ death benefits in corporate accounts and keeping most of the investment profits instead of paying the survivors.
The agency was responding to a report in Bloomberg Markets magazine on what has become a standard practice for life insurance policies issued by companies including Prudential Financial and MetLife.
Instead of paying a lump sum to survivors when a policyholder dies, insurers keep the money in their own accounts, pay uncompetitive interest rates to survivors and give them misleading guarantees about the safety of the funds.
“The possibility that life insurance companies are profiting inappropriately from these service members’ sacrifice is completely unacceptable,” Mike Walcoff, acting undersecretary for the agency’s Veterans Benefit Administration, said in an e-mailed statement. “The VA is conducting a full investigation into the life insurance companies and their procedures in this program.”
Prudential, the secondlargest life insurer, handles policies for U.S. military personnel and veterans. MetLife, the largest life insurer in the U.S., provides insurance for nonmilitary federal employees.
The New York State Insurance Department will review the legality of the practice, an official said.
Insurers are holding on to at least $28 billion owed to survivors, said three firms that handle retained-asset accounts for about 130 life insurance companies.