by Madeleine Kando
Once in a while you hear something on the news that goes so against your sense of what is right and wrong, that it makes you doubt whether the human race should be allowed to exist.
This is what happened to me when I listened to a report on NPR on how Life Insurance Companies benefit from soldiers who die, even after they are dead. David Evans in Bloomberg News has written about this.
He recounts the experience of a mother whose son just died in Afghanistan. He had a $400,000 life insurance policy. The company sends the family a letter offering them to place the full amount in a convenient ‘interest-bearing account’. They also send them what looks like a legitimate checkbook with blank checks.
They don’t tell them that the account is not placed at a bank but remains at the Insurance company, drawing 4 to 5% interest for the company, while the family at the most gets 1% interest.
They don’t tell them that the ‘checks’ are not really checks but IOU’s which have no monetary value until they get processed by the insurance company. You would assume that a checkbook with blank checks means you can use them to buy things with, no?
They don’t tell them that by withdrawing the money and putting it in a bank they would earn a lot more interest.
Way down buried in very fine print it says that they can close the account and just get the money. But who wants to have $400,000 lying around in cash when the Life Insurance Company offers you a convenient ‘interest-bearing’ account? You assume it is sitting in a bank, drawing the average interest of a savings account.
Not only is this routine procedure at the Department of Veterans Affairs but the Federal Government itself lets this happen for their own 4 million active employees and retirees. It gets worse here: the Insurance Company automatically opens an account in your name and mails you one of those ‘checkbooks’. They don’t say the account is not FDIC insured and they don’t say that it is not sitting in a bank. Nowhere on such a form does it say that you can just withdraw the money, period.
No one seems to regulate this practice by the insurance industry. They are what they call ‘retained-asset’ accounts (they retain the money until it is asked for, which sometimes can take as long as 10 years). The most recent 'finance reform bill' does not even address this issue.
Can you imagine how much money the insurance companies make from the dead during that time? Not even the most hungry pack of hyenas can compete with that! leave comment here
Saturday, July 31, 2010
by Madeleine Kando