In military news that will surely make your blood boil, the VFW uncovered proof that the VA agreed to a Purdential insurance policy payout system that allowed the company to profit at the expense of grieving military families. “The documents speak for themselves, and they show that Prudential initiated this program for the money that could be gained, not to help grieving military families — and the VA knew all about it,” VFW National Commander John A. Biedrzycki Jr. said. “For an insurance company to profit off the dead is sickening, but for our own government to turn a blind eye to profiteering is something entirely else.”
The law governing Service Group Life Insurance and Veterans Group Life Insurance requires survivors receive a single payment rather than a payout system in which survivors draw from an account. A 2009 document, however, shows that that VA allowed Prudential to ignore that law. This gave Prudential Insurance Co. an edge in holding onto survivor’s money rather than pay it out in a lump sum which helped the company profit at the expense of grieving military families.
And to compound the issue, documents revealed that Prudential trained personal to steer survivors away from lump sums – even when they wanted their death benefits paid out in this manner.
VFW Uncovers VA’s Knowledge of Prudential’s Plan to Profit on Backs of Grieving Military Families
In 2009, a class-action lawsuit was filed with the U.S. District Court in Springfield, Massachusetts. That lawsuit alleged Prudential collected interest from unpaid life-insurance benefits by encouraging beneficiaries to leave the money in so-called Alliance Accounts rather than taking lump-sum payments.
Then, according to the complaint, Prudential made hundreds of millions of dollars off of those benefits by investing the money. The VFW got involved in the case in 2010 and filed a motion for the documents release two years ago.
VFW.org reported that unsealed documents received by the Veterans of Foreign Wars of the United States reveal that the Department of Veterans Affairs agreed to how Prudential Insurance Company of America could disperse death payments, and that the insurance giant may have aggressively trained its staff to put the company’s interests ahead of grieving families in the payout of those benefits.
Among the 3,600 pages of documents acquired by the VFW is one detailing a plan wherein account managers were encouraged to increase earnings by holding onto control of client — that is beneficiary — money. The document includes a subtitle stating “It’s About Money,” Biedrzycki said in a statement Tuesday.
Another document reveals Prudential trained personnel on how to deal with survivors who insist on a lump-sum payout rather than leaving the money with Prudential and drawing on it in much the same way they would a savings or checking account.
Biedrzycki is calling for an independent investigation into the Prudential/VA arrangement and for the SGLI and VGLI contracts to be awarded to another company.
We’ll keep you informed as more news of this latest VA scandal is revealed.