A secret deal between the U.S. Department of Veterans Affairs and Prudential Financial allowed the company to withhold lump-sum payments of life-insurance benefits for survivors of fallen soldiers.
Posted on 09/14/2010 2:13:09 PM PDT by Palter
Secret's out.
For more than a decade, Prudential Financial Inc. has had a confidential arrangement with the U.S. Department of Veterans Affairs to withhold lump-sum payments of life-insurance benefits to the family of dead soldiers, so that Prudential could invest that money and keep whatever cash it made it itself, Bloomberg News reported.
The VA failed to inform soldiers and their families of the agreement. Prudential, the second-largest U.S. life insurer is the only provider of life insurance for 6 million U.S. military personnel.
The arrangement began in 1999 and was kept confidential until it was put into writing in 2009.
"Every veteran I've spoken with is appalled at the brazen war profiteering by Prudential," said Paul Sullivan, a 1991 Gulf War vet and executive director of Veterans for Common Sense, a nonprofit advocacy group. "Now vets are upset at the VA's inability to stop Prudential's bad behavior."
Survivors who requested lump-sum payouts were sent checkbooks, essentially IOUs that weren't federally insured, instead of actual checks.
Prudential held $662 million of survivors' money as of June 30. The general account earned 4.2% in interest in 2009, mostly from bond investments.
Bob DeFillippo, a Prudential spokesman, told Bloomberg News that the company was in compliance with its contract with the Department of Veterans Affairs.
The VA has since launched an investigation of its life insurance program at the end of July.
Defense Secretary Robert Gates said he wasn't aware of the arrangement until the probe began.
"I actually believed that the families of our fallen heroes got a check for the full amount of their benefits," Gates said at the time. "This came as news to me."
VA spokeswoman Katie Roberts said the agency will announce that it will change its insurance program, which will allow survivors to request and receive lump-sum checks.
But Sullivan said the VA has already dropped the ball.
"When grieving families check the box that they want a lump sum, they should get it. We remain disappointed and irate at the VA's failure to provide advocacy for veterans," he said.
A secret deal between the U.S. Department of Veterans Affairs and Prudential Financial allowed the company to withhold lump-sum payments of life-insurance benefits for survivors of fallen soldiers.
Ahhh the good hands racket.
Does the TREACHERY ever stop! People involved in this need maximum prison time!
I wonder how the media will spin this to make it Bush's fault
I also plan to check my mutual funds to make sure I am not holding any Prudential stock
Oh, it's much worse than it appears.
That the VA allowed Prudential to issue retained-asset accounts for 10 years while the contract required lump-sum payouts is “more evidence that the VA was asleep at the wheel for a decade,” says Sullivan, who was a project manager and analyst at the VA from 2000 to 2006.
It gets better. In 2009, under President Obama, they retroactively permitted this:
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.
Prudential is earning about 4.2% on this money, but paying only 0.5% to the survivors in their accounts. They are and have been pocketing the rest.
passing it up the rat line...
.
As a recipient of these funds from Prudential, I do agree that the families should have the option of receiving a lump sum payout or the checkbook/account.
However, there is nothing preventing the family from writing one check to cash out the Prudential account
I learned from my Father-in-Laws death from lung cancer. The insurer tried to take advantage of my Mother-in-law. They failed, but they were relentless.
God help me if it ever happens to my husband dealing with the SGLI,but I would never take payments. I trust me to invest my own money.
I became aware many years ago that Prudential was one of the ever-growing number of companies that fall into the classification that I call “shysters”.
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