Wednesday, August 18, 2010

Prudential Clarifies SGLI Misunderstanding

ROA President RADM Paul Kayye, USN (Ret.) met last week with Mark B. Grier, Vice Chairman of Prudential Financial at the ROA's Minuteman Memorial Building. Prudential has faced charges in a series of articles published by Bloomberg News over how it administers its account for survivors of serving members who are killed in the line of duty. Servicemember's Group Life Insurance (SGLI) pays up to $400,000 and pay-out is administered by Prudential. Survivors are offered an option to keep the money in an account for the short term that is accessible by writing draft checks. This money is insured by state insurance plans for at least $250,000 and up to $500,000.

Bloomberg published an account of a SGLI beneficiary who had a draft check refused by a merchant, and challenged what appeared to be low interest rates paid on the money by Prudential. Vice Chairman Grier demonstrated to ROA that the interest rates were within the range of what is paid by banks and credit unions on checking and money market accounts, and that most beneficiaries withdraw the majority of their money within 90 days after getting the service member's estate in order. ROA's Executive Director, MG David Bockel, USA (Ret.) joined the president in the meeting with Prudential.

Read Prudential's press release about addressing concerns with the Department of Veterans Affairs


Thom said...

It just so happens that I was reading the Army Times about the same thing and the two responses differ. Going by the AT article Prudential spun you a yarn. The interest is significantly lower and there was no mention of short term holding. Prudential among others are bilking the survivors!!

ReserveOfficer said...

@Thom: The balance to this post is linked within the text to the Bloomberg article, which the Army Times article is based upon.

ReserveOfficer said...

Update: Prudential insurance met with 15 military and veteran organizations at ROA's Minuteman Memorial Building to provide further updates on the issue of a holding account for payments on the Servicemembers Group Life Insurance. Initially highlighted in the media, and now threatened by law suits, Prudential, which manages the account where SGLI payments are placed, has been accused of "under paying" interest on amounts up to the $400,000 maximum. The Vice Chairman of Prudential, Mark Grier, showed that for a draft account, where beneficiaries can draw out funds at the beneficiaries' request using a draft check, the interest rates are competitive. Because of the size of the insurance payouts some beneficiaries expect interest levels equivalent to certificates of deposit. Prudential's practices have been found by several state insurance adjusters to be acceptable within industry norms.

employers liability insurance said...

As mentioned here me too feel that
interest rates paid by SGLI are competitive in case if someone feel that its lower then they may withdrae the money and deposit it in bank?thanks for the post as there are lots of misunderstandings among people about SGLI

Insured insurances said...

SGLI has always been in controversies among people awareness about it helps to know better...nice share