Wall Street's Dead Soldier Problem

[Swede]

You can't sink any lower than this.


When a policyholder dies, Prudential and MetLife inform the beneficiaries of their death benefit and issue them a "checkbook" that can allegedly be used to draw the money, in whole or in part, from an interest-bearing bank-style account. In the meantime, the money—$28 billion of it, according to Bloomberg—actually stays in the firms' general kitty, earning them interest rates around 5 percent, while they pay the survivors far less—anywhere from 0.5 to 3 percent.

Not only that, but the checks aren't real—they're IOUs. Cindy Lohman found that out after her 24-year old son, Ryan, died in an IED attack in Afghanistan. After grieving for six months, she tried to buy a bed using the checkbook given to her by Prudential, which held her $400,000 death benefit. That check—and another she tried to use at Target—were rejected by the retailers.

http://motherjones.com/mojo/2010/07/military-life-insurance-scam-fraud-prudential-metlife

[Axle_techie]

1. From what I understand

the only establishments that will take these "checks" are banks... Insurance is ran by crazy people only interested in cash.

[ProgressiveProfessor]

2. First thing you do with any settlement is get the cash into your own bank

Its easy to do and stops this kind of thing from happening. If its large enough have different accounts at multiple banks so that it is all insured. Its Personal Finance 101 and yet so many seem not to know it.

[Turbineguy]

3. The words

"insurance company" and "benefit" should never be placed anywhere near each other.