US Military Life Insurance Lawsuit
In 2010, various media outlets noted allegations that the Prudential Life Insurance Company was manipulating the payout of life insurance benefits due to the families of American soldiers in order to gain extra profits. The company provided life insurance to people in the armed forces under a government contract. Rather than paying the full amount due to the families at once, the company would instead deposit the funds into a Prudential corporate account. These accounts are referred to as 'retained asset accounts' and are essentially an I.O.U. from the company to the payee (in many cases a fallen service members' family). While in early 2010 Prudential was making profits of up to 4.2% in its general account, they paid out 0.5% interest in these non-FDIC insured "Alliance" accounts. In some cases, when families requested to be sent a full payout in the form of a check, the family was sent a checkbook, rather than the amount due.
It is not clear if the practice was in violation of law or the contract. In August 2010, the company was sued by a number of the bereaved families. The company's response included an open letter to the military community in which it addressed what it characterized as "misinformation" about the nature of the accounts. Military Times noted that prior lawsuits against insurance companies pertaining to the use of retained asset accounts have been dismissed in federal courts without action.
Read more about this topic: Servicemembers' Group Life Insurance
Famous quotes containing the words military, life and/or insurance:
“War both needs and generates certain virtues; not the highest, but what may be called the preliminary virtues, as valour, veracity, the spirit of obedience, the habit of discipline. Any of these, and of others like them, when possessed by a nation, and no matter how generated, will give them a military advantage, and make them more likely to stay in the race of nations.”
—Walter Bagehot (1826–1877)
“It is a conquest when we can lift ourselves above the annoyances of circumstances over which we have no control; but it is a greater victory when we can make those circumstances our helpers,—when we can appreciate the good there is in them. It has often seemed to me as if Life stood beside me, looking me in the face, and saying, “Child, you must learn to like me in the form in which you see me, before I can offer myself to you in any other aspect.””
—Lucy Larcom (1824–1893)
“Before I get through with you, you will have a clear case for divorce and so will my wife. Now, the first thing to do is arrange for a settlement. You take the children, your husband takes the house, Junior burns down the house, you take the insurance and I take you!”
—S.J. Perelman, U.S. screenwriter, Arthur Sheekman, Will Johnstone, and Norman Z. McLeod. Groucho Marx, Monkey Business, terms for a divorce settlement proposed while trying to woo Lucille Briggs (Thelma Todd)