That whole Prudential dust-up
Sporkmaster wrote about the supposed “scam” that Prudential got caught up in while they were trying to pay out death benefits to widows of troops killed in the war against terror. I had a feeling that Prudential was just trying to do the best they could given the restrictions. They sent out a letter to several organizations that deal with soldiers this week.
First i want to say that I don’t like Prudential even a little bit. I spent some time selling insurance products in the 90s and they were my largest competitor in the area where I worked. They didn’t do anything illegal, but they’d walk right up to the line to make a sale.
Anyway, they took exception with all of the people who said they were cheating widows out of the death benefits from SGLI. One of whom was dicksmith who is always trying to pin something on Rumsfeld, Bush and Cheney regardless if there’s any real evidence or if they even understand the issue. So dicksmith went off half-cocked;
The scam works like this: instead of sending the family the money, the banks used to distribute the funds (in the case of SGLI, Prudential and Metlife) send the family a “checkbook” and a notice that for the convenience of the family the money has been placed in an interest bearing account from which the “checkbook” will draw funds.
Only the “interest bearing account” is not an FDIC insured checking account, as was recently discovered by Cindy Lohman after her son was killed in Afghanistan:
dicksmiths and VoteVets candidate Patrick Murphy jumped on the populist theme to condemn Prudential while dicksmith furiously scribbled a petition so VoteVets could fart into the wind and look like they care about veterans without actually doing anything meaningful.
Pru writes;
Prudential said some media reports that have noted Alliance Accounts are not federally insured have failed to mention that the accounts are backed by Prudential, and by state guaranty funds.
Yeah, insurance is one of the things that the Federal government still allow States to regulate…for now. That’s why the accounts aren’t insured by FDIC, some investments are insured by SIPC but generally insurance products are protected by States.
General Accounts like the Alliance Account are required to have cash on hand every day to pay every single account. But because of the restrictions on the company, expenses are fairly high in the account.
Pru says they informed all of the beneficiaries of this stuff when they sent the checkbooks. I don’t doubt that at all – I remember all of the disclosure documents I had to hand to my clients and the mandatory explanations about every product I sold. Like I said, Pru may have walked up to the line but I’m sure they didn’t cross that line and do anything illegal.
Category: Military issues
Of course, it’d be too hard to call your own bank, and make a deposit for the full amount available into your checking account, using check-by-phone to make the deposit, and have immediate access to the $ through your own bank.
I wrote a check from the Pru account to my personal account the day I received it. No problems at all. It was clearly stated in the paperwork that the Pru account was not a bank account and if I recall correctly it advised moving the money to your accounts. Now at teh time I was on methadone, morphine, gabapentin, and percoset. So if i was able to figure it out no one nas an excuse.
When one of my dearest friends died from AO related cancer, I got a call from his wife who was confused by this also. I told her just to go to her bank, write a check for the full amount to be deposited in her account. She did…no problem. I think the companies would prefer you keep the money with them, but that’s not illegal. When I first heard about this I was upset until I got the whole story. I do believe in time of grief people don’t have their heads on tight and can be easiley confused. I think the companies do try and take advantage of that.