Bloomberg reporter David Evans’ initial article on Retained Asset Accounts appeared in late July, under a sensationalist headline implying that Prudential Insurance Company, which has been operating the Servicemen’s Group Life Program under contract with the Defense Department for many decades, was not paying beneficiaries and taking advantage of families of deceased military service personnel.
In fact Pru was paying beneficiaries through retained asset accounts. The original article went on to attack RAAs generally, suggesting they were some big dark secret — even though they’d been widely reported on and applauded by the financial and popular media since I launched the first retained asset account program 26 years ago.
Scare headlines, carefully culled quotes, lawyerly selected partial facts (such as retained asset accounts — like ALL insurance products — do not have FDIC protection), with glaring omissions (such as that for nearly all of the past 26 years most retained asset accounts enjoyed a higher dollar level of protection from state life insurance guarantee funds than bank accounts were given by the FDIC) may sell magazines and newspapers, but wind up hurting beneficiaries.
Today a new Bloomberg story appeared under the headline “Veterans Agency Made Secret Deal With Prudential Over Benefits.” In it, Bloomberg goes out of its way to claim Prudential hid facts from 6 million servicemen and quotes someone who expressly accuses Pru of war profiteering.
I am no fan of Prudential. In fact I am one of many who regard the Pru as one of America’s dumbest and slowest moving large life insurance companies.
The Bloomberg story points out that although Pru got the green light from DoD to begin using its version of the Retained Asset Account in 1999 — over 15 years from the date the first retained asset account was launched — it didn’t get around to amending its group insurance contract with the Defense Department until 2009.
While that’s both slow and dumb on Prudential’s part, that Pru was using Retained Asset Accounts seems to have been very public — every claim form and every death benefit payment package explained things to those most involved, the beneficiaries.
In short, bit for the headline the Bloomberg article says nothing that suggests anything untoward or corrupt. The article also again fails to explain how beneficiaries receiving payment by “a checkbook instead of a check” are getting anything less than a lump sum.
