VA Takes a Hard Look at SGLI/VGLI Program

When you read this you need to think of something. It has been going on for a long time but no one was talking about it. No one was talking so no one tried to stop it. Now that some brave soul said this is wrong, things are starting to happen for other families. Now that Veterans for Common Sense and Paul Sullivan, along with other groups got involved, Congress and the VA are doing something about it.

VA Continues to Ensure and Protect Servicemembers', Survivors'

Life Insurance Benefits

VA Takes a Hard Look at SGLI/VGLI Program

WASHINGTON (September 14, 2010)- The Department of Veterans Affairs (VA)
has reviewed the account administered by Prudential that includes
Servicemembers' Group Life Insurance (SGLI) and Veterans' Group Life
Insurance (VGLI) programs to ensure beneficiaries are protected, being
treated fairly, and accorded the utmost care and respect. VA is also
ensuring that benefits are delivered in a transparent way that clearly
outlines all available options.

Since 1965, VA has successfully delivered life insurance benefits to
survivors of our Nation's Servicemembers and Veterans.

"The most important thing we can do is ensure that beneficiaries have
options that are clear, competitive, and come at no personal cost during
a time of emotional stress," said Veterans Affairs Chief of Staff John
R. Gingrich. "Providing clear and concise options for the beneficiary is
a top priority."

VA will continue to provide a full explanation of terms up-front,
increase clarity of options and more actively promote current financial
counseling to assist in decision making. These efforts will further
enhance the transparency that will continue to ensure confidence in this
important program.

The department will provide better clarity of payment options by using
new documents that ask the beneficiary to choose one payment option,
including a lump sum check, or a lump sum Alliance Account (retained
asset account) that allows beneficiaries the option to immediately write
a check for the entire payment or any lesser amount. VA will also
continue to offer the option for payment in 36 monthly installments.

VA worked with beneficiaries, regulators, and subject matter experts to
determine appropriate improvements to provide beneficiaries all benefits
due under current life insurance programs to include Alliance Accounts
in a secure and timely manner.

"Prudential has agreed to implement these adjustments, and the
department will continue to carefully monitor this program to ensure
that Servicemembers' and Veterans' beneficiaries are well-protected,"
said Gingrich.

VA is also taking the following actions:

* All SGLI/VGLI related information, including frequently asked
questions, website information and handbooks will be modified to clearly
and completely explain all aspects of the Alliance Account and all
options available to the beneficiary.

* VA will require Prudential to conduct a follow up contact with
beneficiaries whose accounts remains open after six months to confirm
the beneficiary understands the terms of the account.

* VA will clearly designate the source of correspondence by
removing the SGLI seal from all checks, forms, and correspondence and
replacing it to show that it is from Prudential, with the subtitle of
"Office of Servicemembers' Group Life Insurance".

* VA will identify additional opportunities to encourage
beneficiaries to use the free financial counseling service.

* VA will, in coordination with the Department of Defense (DoD),
improve support to Casualty Assistant Officers and Transition Assistance
Program (TAP) Personnel by helping to prepare additional training
materials and instruction.

SGLI provides group life insurance for the Uniformed Services, such as
Servicemembers on active duty, ready reservists, and members of the
National Guard, among others. More information on the SGLI/VGLI program
is also available at http://www.insurance.va.gov/sglisite/sgli/sgli.htm

VCS in the News: VA Made Secret Deal with Prudential; Families Lose Millions to Insurance Giant
Written by David Evans
Tuesday, 14 September 2010 00:16
VA secretly amended Prudential's contract, allowing it to withhold payments to survivors of fallen soldiers

September 13, 2010 (Bloomberg Markets Magazine) - The U.S. Department of Veterans Affairs failed to inform 6 million soldiers and their families of an agreement enabling Prudential Financial Inc. to withhold lump-sum payments of life insurance benefits for survivors of fallen service members, according to records made public through a Freedom of Information request.

The amendment to Prudential’s contract is the first document to show how VA officials sanctioned a payment practice that has spurred investigations by lawmakers and regulators. Since 1999, Prudential has used so-called retained-asset accounts which allow the company to withhold lump sum payments due to survivors and earn investment income on the money for itself.

The Sept. 1, 2009, amendment to Prudential’s contact with the VA ratified another unpublicized deal that had been struck between the insurer and the government 10 years earlier -- one that was never put into writing, Bloomberg Markets magazine reports in its November issue. This verbal agreement in 1999 provoked concern among top insurance officials of the agency, the documents released in the FOIA request show.
read more here

VA Made Secret Deal with Prudential