Parents Of Deceased Soldiers Sue Over Handling Of Life Insurance
August 31st, 10Five additional parents of US soldiers killed during duty have joined with another parent in a lawsuit against Prudential Financial. The suit claims Prudential profited from the dead soldiers’ policies by paying only a small amount of interest on life insurance benefits while holding on to a large portion of interest themselves. According to a report by the Associated Press, the families say bookkeeping misrepresented how the insurance beneficiaries could collect lump-sum payouts.
The case could eventually impact tens of thousands of soldiers’ beneficiaries who received payments. The Associated Press reported that company officials couldn’t address the current legislation, they say they are handling money properly. The suit deals with Alliance Accounts which are similar to checking accounts. Beneficiaries can write “checks” to receive some of the insurance money or they can get 36 equal payments each month. If they opted for the Alliance Account, beneficiaries received interest rates ranging from .5 to 1.5 percent. But the soldiers’ families say Prudential actually holds the money in a general account worth $2 billion and that the company earns five to six percent interest. Then they say the company keeps the difference.
“They didn’t tell anybody, ‘We’re going to make money with it,’” Cristobal Bonifaz, one of the plaintiffs’ attorneys told the Associated Press. “What we’re saying to Prudential is, ‘You kept investing the money, but that money did not belong to you as of the day that person died, and whatever you made off it, you should give to those persons it was meant for.’” Bonifaz believes the money Prudiential made off the soldiers’ money could range from a few thousand dollars up to $30,000.
Prudential spokesman Bob DeFillippo told the Associated Press that the interest rates are comparable to checking accounts and the money is handled this way so that it’s easily accessible. “This is a very, very difficult time for (beneficiaries) and we do everything we can to make this not any more difficult … If their intent is to have a lump sum, all they need to do is write a draft to themselves and withdraw it,” DeFillippo told the Associated Press.
