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It's bad enough that some companies sell overpriced insurance to vulnerable soldiers. What's worse is using their deaths to defend their shameful practices.
Companies that sell overpriced life insurance to soldiers headed off to war may come up short on scruples, but they certainly have plenty of nerve. The outrage, those companies say, is not that they profit off of young men and women serving their country, but that some military officers have interfered by convincing soldiers not to waste their money on the high-cost, low-value insurance policies. The companies peddling those policies are even willing to exploit the tragic deaths of soldiers to defend their practices.
Richard Worsham, who manages 150 insurance agents selling to military personnel in eight states, uses the example of five soldiers killed in the line of duty to make his case. Before their deaths, the soldiers had dropped supplemental life insurance policies on the advice of commanding officers, so the soldiers' families received a smaller payout, Worsham said. He accused the officers of being "hypocritical insurance gods" who meddled in their subordinates' affairs, but the real hypocrites are Worsham and his salesmen.
One of the cases detailed by the New York Times is sadly typical. All soldiers can get up to $250,000 coverage through the military for $16.25 a month, and they can buy supplemental term insurance policies at similar rates. That's what Army Pvt. Michael Deuel did, ending up with two policies valued at $500,000 for a reasonable $35 a month. But Deuel was also persuaded to buy a so-called Flexible Dollar Builder policy from Trans World Assurance Co. that offered an additional death benefit of only $32,500 for $100 a month. Such policies promise a future cash value but it never equals the amount paid into the plan, and that is the one Deuel decided to drop.
No one should argue that Deuel made the wrong financial decision for himself at the time. The fact that insurance companies would use his death in Iraq to defend their deceptive sales practices exposes their cynicism.
Actually, military officers who help soldiers make good choices on life insurance appear to be the exception. Some insurance companies have been given access to official meetings on military bases where salesmen peddle products under the guise of official sanction, and other companies hire retired officers to befriend active duty personnel while pushing supplemental policies.
An investigation by the Government Accountability Office is currently under way, and bills have been filed in Congress that would outlaw the worst abuses. The insurance industry shows its arrogance, however, when it tries to convince the GAO and Congress to focus on those officers who interfere with the companies' sales practices rather than on the appropriateness of policies sold to soldiers headed to war. The real shame is that anyone would exploit young soldiers when they are most vulnerable.