VA Probing the Handling of Soldier Death Benefits

VA to Probe Insurer Handling Soldiers’ Benefits

"The
practice of issuing checkbooks to survivors, instead of paying lump sums, extends beyond the military. Over the last decade, these so-called retained-asset accounts have become standard operating procedure in the insurance industry."

"The
checkbook system cheats the families of the deceased, says Jeffrey Stempel, an insurance law professor at the William S. Boyd School of Law at the University of Nevada, Las Vegas.

“It’s institutionalized bad faith,” he said. “In my view, this is a scheme to defraud by inducing the policyholder’s beneficiary to let the life insurance company retain assets they’re not entitled to. It’s turning death claims into a profit center.” "

The U.S. Department of Veterans Affairs is investigating life insurance companies’ practice of putting veterans’ death benefits in corporate accounts and keeping most of the investment profits instead of paying the survivors.
Mike Walcoff, acting undersecretary for the agency’s Veterans Benefit Administration, said yesterday in a statement announcing the investigation that it would be “completely unacceptable” for insurers to profit from such practices.