Insurance Companies Not Meeting Regulatory Standards
The family of the passed away now has no say on the funds of his life insurance policy, that’s what insurers are making people to think by their schematic and faulty policies.
Such a case was experienced by Cindy Lohman, the mother of a 24-year-old Army sergeant, Ryan P. Baumann, who had been killed by a bomb in Afghanistan. After his death, she received the claims his of life insurance policy, which stood around $400,000, in the form of a check book by Prudential Financial, according to which she could use the money lying in an interest-bearing account. But she failed to notice that it was not authenticated by Federal Deposit Insurance Corp. But later, she discovered that the money was actually not there in the bank.
It was found that Prudential Financial used insurance accounts as corporate accounts for yielding investment income and paid survivors an interest rate much lower than the returns.
Many Americans have fallen prey to insurers’ such activities where instead of providing lump-sum amount, check books are being issued to dodge the survivors.
Other insurance companies like MetLife are following suit, which is a violation of the federal bank’s 1933 law, which declares it a crime to accept deposits without state or federal authorization.
But no stringent efforts have been taken for the same by financial regulatory legislation. Only a new federal insurance office has been set up that would only gather information, monitor the industry against systemic risk and would hold talks with state insurance regulators.
Some insurance companies have revealed that they received subpoenas while others like Northwestern Mutual Life didn’t get any.
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