Defense Base Act Compensation Blog

The Modern Day DBA Casualty

War Profiteering: Dead Soldiers’ Parents Sue Insurers Over Military Benefits

Posted by defensebaseactcomp on August 31, 2010

Prudential War Profiteers under US Government Program

The parents of six deceased U.S. soldiers are suing Prudential Financial, saying it paid paltry interest on military life insurance benefits while keeping more generous interest earnings for itself.

Five plaintiffs joined the original plaintiff Monday in the lawsuit, which was filed in July in U.S. District Court in Springfield, Mass. It accuses Prudential of profiting from the dead soldiers’ policies with bookkeeping maneuvers and misrepresenting the way the beneficiaries could collect lump-sum payouts.

Their attorneys are seeking class-action status.

If granted, it could affect tens of thousands of beneficiaries who received payments under group life insurance policies for military members and veterans created by Congress and administered by Prudential.

A spokesman for the Newark, N.J.-based financial giant said Monday that while company officials cannot address the pending litigation, they strongly defend their handling of the money as responsible and deferential to the beneficiaries’ grief and needs.

The debate centers on Prudential’s use of what it calls Alliance Accounts. The accounts are similar to checking accounts and come with a booklet of drafts. Beneficiaries can write drafts to themselves up to the payout’s full amount, an option they can pick in lieu of 36 equal monthly installments.

Interest paid to beneficiaries who parked their money in Alliance Accounts in the last several years has ranged from 0.5 to 1.5 percent, according to the lawsuit.

But the plaintiffs say the checks are equivalent to an IOU, and that the money doesn’t actually sit in those accounts as of the time of the soldier’s death.

They allege Prudential holds the money in its $200 billion general account and earns 5 to 6 percent interest; moves it into an Alliance Account only when the beneficiary requests it; pays out at the lower interest rate; then keeps the difference.

4 Responses to “War Profiteering: Dead Soldiers’ Parents Sue Insurers Over Military Benefits”

  1. If this is true it is absolutely disgusting!

    I hope Prudential is not taking advantage of soldier’s families. If they are, I am sure they will pay dearly at the end of it all.

    God bless our soldiers and their families.

  2. Marlo said

    Okay I am all for this. But why is it that everyone stands and screams and stands with the military members. But to stand with the contract. (which most are veterans) The people should stand with both military and contractors. Making huge profits from someones death and misfortunes is wrong. Lets get a grip with these companies gross mishandling of benefits.

  3. sandsucker said

    This is the most disgusting, disrespectful, treasonous, immoral and again disgusting act against the U.S. military and the families that have suffered and sacrificed so much.
    The names of the individuals that made the decision needs to be published and made public.

  4. […] War Profiteering: Dead Soldiers’ Parents Sue Insurers Over Military Benefits […]

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