Excellent news: House Bill Targets Insurers Holding Soldiers’ Money

House Bill Targets Insurers Holding Soldiers’ Money
http://noir.bloomberg.com/apps/news?pid=20601070&sid=aXPMjgf1ML_o

Aug. 2 (Bloomberg) -- Representative Debbie Halvorson wants Congress to set new rules for life insurance companies that profit from accounts that hold death benefits from policies of dead U.S. soldiers and veterans.

The first-term Illinois Democrat introduced legislation on July 30 that would require companies such as Prudential Financial Inc. to tell beneficiaries how their money will be invested and how much the insurer stands to make from holding the funds.

Her legislation follows the start of a probe by the U.S. Department of Veterans Affairs into what has become a common industry practice. Officials at the Pentagon and the White House have said they’ll support that investigation.

Bloomberg Markets magazine reported on July 28 that life insurance companies keep money in their own accounts, instead of paying a lump sum directly to survivors when a policy holder dies. The insurers pay uncompetitive interest rates and offer misleading guarantees about the safety of accounts that aren’t federally insured.

“Hearing about this, I was just outraged,” Halvorson said in a telephone interview yesterday. “It’s corporate greed.”