Newly released internal documents show that Prudential Insurance encouraged employees to manipulate grieving military families into leaving lump-sum insurance payouts with the company.
“It’s About Money,” reads a subtitle from the documents, released last week as part of a class-action lawsuit.
The policy documents detail strategies to boost company profits by persuading families to leave payout funds with Prudential for management purposes. The company offered employee training specifically to address the case of bereaved family members desiring to take a lump sum rather than leaving the payout with Prudential to manage.
A second internal document indicated that this arrangement — leaving the lump sum with Prudential — would result in big interest payments for Prudential, but just a small fraction in interest payments to beneficiaries.
The Department of Veterans Affairs claims it was totally unaware of the practice, even though Prudential has charge over Servicemember Group Life Insurance (SGLI) and Veterans Group Life Insurance plans, Military.com reports.
SGLI is a salary deduction-based life insurance program the military generically provides to all active-duty members. Servicemembers have the option of declining government coverage and choosing a private provider, which is exactly where Prudential steps in.
Filed in 2009, the lawsuit alleges that Prudential made off with hundreds of millions of dollars by aggressively persuading beneficiaries not to take out lump-sum payments. Prudential settled the suit in 2014 with a payout of $40 million, but at the time, refused to admit wrongdoing.
Veterans of Foreign Wars National Commander John A. Biedrzycki Jr. has charged that the VA was aware of the profiteering and did nothing. He wants a full investigation of both the VA and Prudential’s infamous ‘Alliance Accounts.’ He’s also adamant that the SGLI and VGLI contracts should be taken away from the insurance company.
“The documents speak for themselves, and they show that Prudential initiated this program for the money that could be gained, not to help grieving military families — and the VA knew all about it,” Biedrzycki told Military.com. “For an insurance company to profit off the dead is sickening, but for our own government to turn a blind eye to profiteering is something entirely else.”
The company, however, disputes the characterization that it favored profits to the exclusion of the well-being of beneficiaries.
“Portions of these documents have been used out of context to assert incorrectly that the Company’s potential for making a profit is the sole motivation for offering alliance accounts,” Sheila Bridgeforth, Vice President of communications at Prudential Financial, told The Daily Caller News Foundation. “Use of the alliance account for the SGLI program was approved by the Veteran’s Administration as a service enhancement. Alliance Accounts give beneficiaries an immediate place to hold their insurance benefits and earn interest while they decide what they want to ultimately do with the funds.”
Prudential is still being allowed to shield 16 documents from the public’s eye.