NEWARK (CN) – Families of fallen veterans claim in a federal class action that Prudential Insurance abuses its government-sanctioned monopoly to misappropriate “hundreds of millions of dollars worth of life insurance proceeds” due to “beneficiaries of fallen military service members and veterans.” The federal government created the programs during the Vietnam War due to insurers being “unwilling to underwrite insurance coverage for members of the service.”
Veterans and Military Families for Progress claims Prudential has “an exclusive government-sanctioned monopoly” on Veteran’s Life Insurance Programs under Servicemembers’ Group Life Insurance.
The program is supervised by the Department of Veterans Affairs.
The class claims that Prudential is “required to disburse the life insurance proceeds to the beneficiaries of the fallen service members and veterans in accordance with regulatory mandates established by Congress.”
But they say the giant insurer instead has created an “Alliance Account” and “lines its own pockets with interest earnings accrued on lump sum insurance benefits owed to families of deceased service members.”
The class claims that the “Alliance Account” is riddled with problems and false representations, one of the most significant being that the money in the account lacks “the safety and security of FDIC insurance.”
They claim that Prudential puts the money from Alliance Accounts into its general corporate account, where, “undisclosed to the beneficiary, Prudential invests the money on its own behalf in bonds and other investments” that yield about 4 percent annual returns, “more than eight times as much as the paltry interest paid on money held in the Alliance Accounts.”
The families claim Prudential “takes every opportunity to steer the beneficiary away from taking the proceeds all at once;” that it charges arbitrary “fees” on the money in the account when no actual banking services are being provided; and that “uses its privileged position as the exclusive provider of insurance to the captive audience of military families” to take advantage of the families “in a time of unfathomable grief.”
The families seek an injunction, disgorgement of ill-gotten gains, restitution and damages for fraud, conversion, unjust enrichment, breach of duty, breach of faith, breach of contract and violations of 38 U.S.C. §1970(d) and 38 C.F.R. §9.5.
They are represented by Carl Beckwith with Beckwith and Wolf of Closter, N.J.