Publication

Offit Kurman Insurance Recovery Alert:

Insurance Companies Turn Military Deaths Into “Profit Centers”

Gruesome news has spread quickly in recent days around Washington, DC and throughout the country that insurance companies have been turning the deaths of American servicemen and women into “profit centers.”  The news broke as a result of an investigation concerning Prudential Financial Inc. and MetLife, Inc. Prudential administers life insurance policies for U.S. military personnel and veterans, while MetLife administers life insurance policies for non-military federal employees. Prudential is supervised by the U.S. Department of Veterans Affairs, which has launched an investigation into Prudential’s practices. Offit Kurman is investigating allegations that insurance companies have been taking hundreds of millions of dollars in profits that belong to the families of deceased soldiers (and other policyholders) by keeping the money in “retained-asset accounts.” These allegations appeared in a recent article in Bloomberg Markets magazine.  Upon the death of a policyholder, such as a service member in Iraq or Afghanistan, life insurance benefits are payable to that service member’s beneficiaries. The beneficiaries may be given the option to receive the benefits in the form of a either a “single sum” or “lump sum” payment or annuity payments. When the “single sum” option is elected, the insurance company “pays out” that death benefit in the form of a “checkbook,” which has been described as more akin to an “IOU,” with a representation that the money is being kept safely in an interest bearing account. The money, however, is deposited into the insurance company’s corporate investment account, which is not FDIC-insured, and has reportedly earned interest at rates higher than 5% at times. When the insurance company eventually pays the full death benefit, the beneficiaries receive 1% or less in interest, and the insurance company pockets the difference. This practice has led to the insurance companies’ profiting in the hundreds of millions of dollars at the expense of deceased service members’ (and other policyholders’) families. Anyone who believes that he or she has been adversely affected by these events may contact Frederick A. Pettit, Esq. (267-338-1319 or fpettit@offitkurman.com) or Mark E. Gottlieb, Esq. (267-338-1318 or mgottlieb@offitkurman.com) if they would like further information.