On the heels of an investigation by the Attorney General of New York Andrew Cuomo regarding the use of retained asset accounts[1] by life insurers, United States House Representative Deborah Halvorson (Ill.-D) recently introduced legislation that would require, among other things, beneficiaries of the Servicemembers’ Group Life Insurance program to receive financial counseling and disclosure information regarding life insurance payments. Such disclosure would include telling beneficiaries how much interest the retained asset account will accrue and how much the insurer expects to earn from the funds in the account. The legislation would also require the Department of Veterans Affairs to provide an annual report to Congress to “ensure that insurance companies are being responsive to military families.”
The legislation, called the Securing America’s Veterans Insurance Needs and Goals (“SAVINGS”) Act of 2010 (H.R. 5993), was referred to the House Committee on Veteran’s Affairs on July 30, 2010. Co-sponsors of the SAVINGS Act include committee chairman Bob Filner (Calif-D). Media sources have indicated that congressional hearings regarding the bill may be held as soon as September, after House members return from their August recess.
In related news, United States Senator Charles Schumer (N.Y.-D) has announced that he is drafting legislation that would require life insurers providing military life insurance to offer beneficiaries an option to receive a lump-sum payment of benefits. Senator Schumer, along with nine other Senate colleagues, sent a letter to Secretary Eric Shinseki of the Department of Veterans Affairs urging him to “take action to stop insurance companies from profiting off benefits owed to the families of service members who died in service to our country.”
We will continue to monitor developments relating to the use of retained asset accounts here at InsureReinsure.
——————————————————————————–
[1] A retained asset account is a benefit payment option designed to be a temporary repository of funds while the beneficiary considers the available options. Beneficiaries are provided a check book, from which they can access the life insurance proceeds, even doing so with one check for the entire amount. Some insurers provide beneficiaries with a checking account, while other provide a draft account. These accounts accrue interest. Periodic account statements are provided to the beneficiary. As with the beneficiaries of civilians, retained asset accounts are provided to the beneficiaries of fallen soldiers under the Servicemembers’ Group Life Insurance program.