Vet­er­ans Af­fairs looks into sol­diers’ death ben­e­fits

Austin American-Statesman - - WORLD & NATION -

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.

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