Giant life-insurance companies like MetLife have figured out a way to hold onto death benefits owed to bereaved families. Insurers said to hurt troops' families

Giant life-insurance companies have figured out a way to hold onto death benefits owed to bereaved families, including parents and spouses of U.S. soldiers killed in combat in Iraq and Afghanistan, according to a six-month investigation appearing in the September issue of Bloomberg Markets magazine.

“MetLife and Prudential lead the way in making hundreds of millions of dollars in secret profits every year on money that belongs to relatives of those who die,” a Bloomberg news release says.


“Survivors of service men and women are told they'll get a $400,000 life insurance payout. They don't. Instead, Prudential keeps their money. Families are surprised when they receive what looks like a checkbook. Prudential promises to hold the money in safekeeping for as long as families would like, saying it will pay them 0.5 percent interest.”

Bloomberg continues: “What Prudential doesn't say is that it’s keeping survivors’ money in Prudential’s corporate investment account. … Nor are families told that they could earn more than twice as much interest by opening FDIC-insured money market accounts at banks across the country.”

In a response to Bloomberg, Prudential spokesman Bob DeFillippo said: “For some families, the account is the difference between earning interest on a large amount of money and letting it sit idle.”

MetLife spokesman Joseph Madden told magazine: “The feedback from customers has been overwhelmingly positive. ... We afford beneficiaries security, peace of mind and time to make an informed decision — while earning interest in the interim.”

This article tagged under: Insurers

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