Jewish War Veterans of the United States of America

JWV Commends VA for Prompt Action to Ensure and Protect Survivors’ Benefits

September 2010



The Jewish War Veterans of the USA (JWV) commends the Department of Veterans Affairs for its prompt action in correcting the abuses in the way in which death benefits are paid to survivors of those who have been lost in battle.

It has been recently revealed that due to a previously undisclosed agreement between the Department of Veterans Affairs and Prudential Financial, Prudential has been allowed to make money from unsuspecting survivors of service members killed in action.

Under this agreement, which has come to light as the result of a Freedom of Information Act request, Prudential has issued "checkbooks" tied to its Alliance Account rather than immediately paying out the lump-sum death benefits payments which were stipulated under its original 1965 contract with the government.

The money in these "checkbooks" is not Federally-insured and has allowed Prudential to deposit monies in a non-fiduciary account with a much higher interest rate for itself than it is paying to the survivors.

In light of this report, the VA has reviewed the account administered by Prudential "to ensure beneficiaries are protected, being treated fairly, and accorded the utmost care and respect. VA is also ensuring that benefits are delivered in a transparent way that clearly outlines all available options."

According to VA Chief of Staff John Gingrich:

"The department will provide better clarity of payment options by using new documents that ask the beneficiary to choose one payment option, including a lump sum check, or a lump sum Alliance Account (retained asset account) that allows beneficiaries the option to immediately write a check for the entire payment or any lesser amount. VA will also continue to offer the option for payment in 36 monthly installments. VA worked with beneficiaries, regulators, and subject matter experts to determine appropriate improvements to provide beneficiaries all benefits due under current life insurance programs to include Alliance Accounts in a secure and timely manner."

Beneficiaries need no longer worry about having their money held in accounts that allow Prudential to make a higher interest percentage on the account than the holder of the account.

The JWV commends the VA on taking swift action to ensure that abuses of the system will no longer be tolerated. The VA should also consider making available financial consultants, guaranteed interest accounts, and other available secure investments to protect recipients against indiscreet investments, scam artists, and the like.

The JWV will continue to monitor the circumstances under which these benefits are administered to ensure that abuses of the system will not be allowed to recur at a future date.

 

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