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pecuniumNo, I'm not happy.
Prudential, and any number of other insurance companies are taking advantage of, one might go so far as to say cheating, the bereaved. Among those are the families of dead soldiers.
What they do is tell the beneficiaries of life insurance policies that their money is in a guaranteed account, earning interest, and can be accessed just as if it were a checking account.
The accounts pay about 4 percent... to Prudential, et al. The beneficiaries are getting, apparently, less than they would if they put it into a regular savings account. Which is all the more galling because the guarantee... isn't really.
New York-based MetLife has told survivors in a standard letter: “To help you through what can be a very difficult, emotional and confusing time, we created a settlement option, the Total Control Account Money Market Option. It is guaranteed by MetLife.”
No FDIC Insurance
The company’s letter omits that the money is in MetLife’s corporate investment account, isn’t in a bank and has no FDIC insurance.
“All guarantees are subject to the financial strength and claims-paying ability of MetLife,” it says.
Both MetLife, which handles insurance for nonmilitary federal employees, and Prudential paid 0.5 percent interest in July to survivors of government workers and soldiers. That’s less than half of the rate available at some banks with accounts insured by the FDIC up to $250,000. (Bloomberg)
Best part of this... the money, the payout someone spent money making sure was there to help their loved ones (one of the strange comforts while I was deployed, was knowing Maia was in no financial worry if I died... she was getting $525,000US, if I was killed. Even after throwing a huge wake, with no one needing to go home, and people from out of town covered for the trip, she was still going to be able to set up shop, doing pretty much whatever she wanted), that money... is vulnerable to MetLife's creditors. Same is true for Prudential, etc.
So the "guarantee" is worth not much.
Worse, the state regulators don't understand these instruments; many of them think they are in FDIC insured banks. More worrisome, the beneficiaries don't understand them, and may think of them as a long-term investment. If they are dormant too long, they may be forfeited to the State.
There are hundreds of thousands, perhaps millions, of of these accounts; they total billions of dollars, and the rightful owners of that money are being cheated of it's benefits.
Really, go read the article. Then complain to your senators, your state insurance commissioner, your congressional rep.
Because this is vile.
What they do to the families of vets... reprehensible. After the shock of losing a loved one, far too young; they are cheated. They get two options, a lump sum for everything, or 36 payments. If they opt for the lump sum, they get this shit.
They could, if they knew about it, move the money (in whole, or in part) into a Roth IRA. The insurance companies don't tell them this. There is a deadline to putting them into a Roth (which is tax free). Why? Because the insurance company wants to get the interest on that money, money they are contractually obliged to pay out; but which they pull a shuck and jive to make it look as though it's been paid, when they keep it in their own coffers.
Bloodsucking bastards, weasling little toads, hiding in the arcana of abstruse phrases in small type; at a time they know the people who read it are not at their mental best. Robbing the dead, and cheating the living.
No, I have little mercy in my heart for them, who use the law as a prybar to wrest pennies from widows and orphans.
Prudential, and any number of other insurance companies are taking advantage of, one might go so far as to say cheating, the bereaved. Among those are the families of dead soldiers.
What they do is tell the beneficiaries of life insurance policies that their money is in a guaranteed account, earning interest, and can be accessed just as if it were a checking account.
The accounts pay about 4 percent... to Prudential, et al. The beneficiaries are getting, apparently, less than they would if they put it into a regular savings account. Which is all the more galling because the guarantee... isn't really.
New York-based MetLife has told survivors in a standard letter: “To help you through what can be a very difficult, emotional and confusing time, we created a settlement option, the Total Control Account Money Market Option. It is guaranteed by MetLife.”
No FDIC Insurance
The company’s letter omits that the money is in MetLife’s corporate investment account, isn’t in a bank and has no FDIC insurance.
“All guarantees are subject to the financial strength and claims-paying ability of MetLife,” it says.
Both MetLife, which handles insurance for nonmilitary federal employees, and Prudential paid 0.5 percent interest in July to survivors of government workers and soldiers. That’s less than half of the rate available at some banks with accounts insured by the FDIC up to $250,000. (Bloomberg)
Best part of this... the money, the payout someone spent money making sure was there to help their loved ones (one of the strange comforts while I was deployed, was knowing Maia was in no financial worry if I died... she was getting $525,000US, if I was killed. Even after throwing a huge wake, with no one needing to go home, and people from out of town covered for the trip, she was still going to be able to set up shop, doing pretty much whatever she wanted), that money... is vulnerable to MetLife's creditors. Same is true for Prudential, etc.
So the "guarantee" is worth not much.
Worse, the state regulators don't understand these instruments; many of them think they are in FDIC insured banks. More worrisome, the beneficiaries don't understand them, and may think of them as a long-term investment. If they are dormant too long, they may be forfeited to the State.
There are hundreds of thousands, perhaps millions, of of these accounts; they total billions of dollars, and the rightful owners of that money are being cheated of it's benefits.
Really, go read the article. Then complain to your senators, your state insurance commissioner, your congressional rep.
Because this is vile.
What they do to the families of vets... reprehensible. After the shock of losing a loved one, far too young; they are cheated. They get two options, a lump sum for everything, or 36 payments. If they opt for the lump sum, they get this shit.
They could, if they knew about it, move the money (in whole, or in part) into a Roth IRA. The insurance companies don't tell them this. There is a deadline to putting them into a Roth (which is tax free). Why? Because the insurance company wants to get the interest on that money, money they are contractually obliged to pay out; but which they pull a shuck and jive to make it look as though it's been paid, when they keep it in their own coffers.
Bloodsucking bastards, weasling little toads, hiding in the arcana of abstruse phrases in small type; at a time they know the people who read it are not at their mental best. Robbing the dead, and cheating the living.
No, I have little mercy in my heart for them, who use the law as a prybar to wrest pennies from widows and orphans.
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no subject
Date: 2010-07-30 02:21 pm (UTC)no subject
Date: 2010-07-30 02:28 pm (UTC)...and then the "DUH!" moment hit me, and I remembered: the company doesn't exist for its own benefit, but for the stockholders'. The stockholders are increasingly more interested in resale value of the stock (especially in the short term) and less interested in the nominal source of its value, the stream of dividend income.
Investors aren't really investors, by and large... they're gamblers, commodity traders in company stock.
no subject
Date: 2010-07-30 02:41 pm (UTC)Where the system really breaks down is the slightly differing incentives between the company and its agents (ie, management). Especially with the rise of stock options, management has incentive to, er, be concerned about stock price even at the expense of medium- and long-term interests of the company. The managers are supposed to be overseen by the Board of Directors but, in the US, they're more often the servant of the managers than their masters.
In this particular instance, Pru et al are committing fraud. They created a system by which the customers would think they had a bank account with all that implies - including rock-solid insurance - and benefited by it.
They should roast in hell with their only path out being through the souls of the dead soldiers whose families they abused.
no subject
Date: 2010-07-30 02:56 pm (UTC)True, I was glossing this over.
I recall reading in a book on corporate governance that stock options should be set up to vest sufficiently far out into the future as to align the managers' and directors' interests with the company's long-term interests, not just its short-term ones.
As for your latter point about Pru et al, yeah, there is no way in which that isn't reprehensible.
no subject
Date: 2010-07-30 04:18 pm (UTC)no subject
Date: 2010-07-30 04:53 pm (UTC)