In July, Bennet Had Requested VA Take Action Against Insurance Companies Profiting from Benefits Owed to Families
Washington, DC – Michael Bennet, U.S. Senator for Colorado and a member of the Senate Military Family Caucus, released the following statement after recent news reports of a Department of Veterans Affairs’ agreement with Prudential Financial Inc., allowing Prudential to create retained asset accounts instead of providing lump-sum payments of life insurance benefits for survivors of fallen service members without notifying them of their options. Bennet has already called for a comprehensive investigation of this program.
“When our military service members are sent overseas or put in harm’s way, their families also make a tremendous sacrifice at home. Failing to provide adequate disclosures about a survivor’s entitlement to a lump sum payment that our fallen heroes have earned for their families is an abuse of trust. It is unacceptable that the VA did not inform soldiers and their families of this arrangement up front.
“In its ongoing investigation, the VA should examine to the fullest extent possible why this was allowed to remain a practice for years without families being notified. We also need to know how many families that asked for lump sum benefits did not receive them and ensure that in the future families are informed of their options and benefits. We need accountability, and we need to make sure that we can prevent this type of abuse of trust from happening again. We owe it to our service members and their families to look out for their interests and to make their lives just a little bit easier.”
According to recent news reports, the VA allowed Prudential to issue retained-asset accounts for 10 years despite the fact that their contract required lump-sum payouts. Reports also indicated that survivors who requested lump-sum payments still received retained-asset accounts.
In July, Bennet and several Senate colleagues urged Veterans Affairs Secretary Eric Shinseki to take action to stop insurance companies from profiting off benefits owed to the families of service members who died in service to our country. In response, the VA sent a letter to all Servicemembers’ Group Life Insurance and Veterans’ Group Life Insurance beneficiaries with Alliance Accounts providing them with information on these programs and their rights and protections as well as resources to learn more.
Additionally, in response to Bennet’s letter, the VA has worked with Prudential to alter its practices and create a Claim Form that allows beneficiaries to affirmatively choose one of three payment options, not default into a retained asset account, which currently provides beneficiaries with a “check book” payment option and not a lump sum payment. A VA-supplied letter will also be enclosed with every Claim Form and every Alliance Account Kit that will explain in a clear and complete manner the terms of the account and encourage beneficiaries to take advantage of free, professional independent financial counseling available to all beneficiaries for a period of two years or as long as they have funds remaining in their accounts.
The VA will require Prudential to conduct a follow up contact with beneficiaries whose accounts remain open after six months to confirm that the beneficiary understands the terms of the account, and, in coordination with the Department of Defense, improve support to Casualty Assistant Officers and Transition Assistance Program (TAP) Personnel by helping to prepare additional training materials and instruction.