Yesterday, Bloomberg News published a scathing indictment of VA's contract with the insurance company Prudential to deliver Servicemembers' Group Life Insurance, or SGLI, benefits to surviving spouses who lost their loved ones in combat.
Bloomberg asserted that VA skirted its responsibilities to deliver a lump sum of cash to grieving spouses by automatically enrolling spouses in Prudential Alliance Accounts. However, VA documents show that VA was transparent on these accounts with SGLI recipients from day one.
AMVETS obtained a copy of the form letter VA uses to explain SGLI payments, which we have included below.
Spouses or loved ones who receive SGLI payments are immediately informed that they have full access to the lump sum payment, but that VA has established a secure account, offering an easier option for grieving loved ones, as outlined in section (A) of the letter. For many types of life insurance policies, this is today's industry standard.
A New York Times story from 2008 discussed the struggles some military widows can face when coping with the loss of a loved and the sudden, unexpected influx of their loved one's life insurance payment. The Times story discussed how many surviving spouses--particularly young widows--attempt to fill the void in their lives with material possessions, quickly winding up in debt.
AMVETS believes VA's contract with Prudential establishing the Alliance Accounts was a good faith, transparent effort to help surviving spouses during the grieving process. As part of VA's contract with Prudential, spouses also have access to free financial counseling, which only 10 spouses had taken advantage of when the Times published its story.
Information for those enrolled in SGLI is readily available on the VA Web site in a 2009 VA handbook explaining the lump sum payment option and Alliance Accounts.
AMVETS leaders have also spoken with military surviving spouses using the current SGLI system who have not encountered major problems in receiving their entitlement.
The Bloomberg story also cited the potential interest Prudential gained by keeping SGLI funds in its general account, while only passing along a .5 percent interest rate to its Alliance Account holders, which include SGLI recipients. Once again, AMVETS leaders disagree with Bloomberg's skewed figures, considering that many personal checking accounts do not offer any significant interest, compared to the Alliance Account option.
This afternoon, CNN reported that VA will continue its partnership with Prudential, but also step up efforts to inform members of the military and their spouses of how the program is implemented.
American Veteran will continue to monitor this issue, as the Pentagon and Congress have called for investigations into the Prudential contract. However, at first glance, AMVETS leaders believe that VA has done nothing disingenuous in this situation, but actually sought to look out for the best interest of surviving spouses coping with a tremendous loss.
(Image: First page of a draft letter for SGLI beneficiaries explaining the lump sum payment procedure and Alliance accounts.)