Wednesday, July 28, 2010

And you thought Health Insurance Cos. were scum

Bloomberg is reporting on the latest insurance scam by the big insurers, this time it involves the $400,000 death benefit to families of fallen soldiers. It seems Prudential and Met Life are giving families checkbooks to use when they are ready to collect the monies. But they aren't checks, they are drafts which means the bank has to collect the money from Pru or Met before it pays out. This means that if you use them like a check they will bounce on you. It also means that the money is not in a bank but in a "retained asset" account with Pru or Met.
Lohman, a public health nurse who helps special-needs children, says she had always believed that her son’s life insurance funds were in a bank insured by the FDIC. That money -- like $28 billion in 1 million death-benefit accounts managed by insurers -- wasn’t actually sitting in a bank.

It was being held in Prudential’s general corporate account, earning investment income for the insurer. Prudential paid survivors like Lohman 1 percent interest in 2008 on their Alliance Accounts, while it earned a 4.8 percent return on its corporate funds, according to regulatory filings.

“I’m shocked,” says Lohman, breaking into tears as she learns how the Alliance Account works. “It’s a betrayal. It saddens me as an American that a company would stoop so low as to make a profit on the death of a soldier. Is there anything lower than that?”
Profiting from the deaths of American soldiers in a most shameless manner. No doubt Prudential CEO John Strangfeld used the profits from this to justify his $18 Million payday. Just as Met Life CEO C Robert Hendrikson used it to justify his $12 Million payday. Well done, gents!

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