I am outraged at the fact that my bank is paying 1% interest on my savings account while charging 5% interest on mortgages! How can people stand by and let the banks gouge their customers like that?
Especially when I just deposited the money I got from my life insurance settlement!
How dare my bank profit off of my dead relative?!?
Actually, the comparison would be if someone said he was wiring the money to your bank account when he was actually putting the money in his own bank account. The insurance company never said that it was retaining ownership of the money.
Except that it's not like that because they never said they were putting money in the beneficiary's account as far as I can tell. It sounds like they were fairly up front about them holding the money until the beneficiary withdrew it.
The letter told Lohman that the full amount of her payout would be placed in a convenient interest-bearing account
They placed the money in the account under their name, which is how they were able to collect most of the interest from that account.
So, I work for a credit union.
I just want to clarify, re: checks/drafts. They're the same thing. Two different words for the same thing.
There's a thing called a 'demand draft' which is where a merchant generates a document that looks exactly like a check, except it just doesn't have your signatue (they just pinky-swear you authorized it), and then they send that document though the normal check system. There's also 'bank drafts' which are the same thing as 'cashier's checks'. At my CU, in all our documentation checks are refered to as drafts. Though its called a checking account.
And the image? That's a plain old check, drawn on an account at Chase.
Now, I bet it's probably some kind of line of credit there, not a checking account, and they bill the insurace company at the end of each month, but still. They're just checks.
As for why they got returned, there's 1000 reasons other than just insuffiend funds. Since they don't say way, we can't gleam any information from that.
Aioua on
life's a game that you're bound to lose / like using a hammer to pound in screws
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
The insurance company retained ownership of the money? Where?
How else could it have collected the interest? I can't give you a check and then go the bank you deposited the money in and ask for the interest.
The same way that bank accounts, trusts, escrow, etc. works? Just because someone has possession of something doesn't mean they have ownership of it. Otherwise that self storage place owns all my stuff!
If I'm not mistaken, those drafts are actually checks, complete with routing number, account number, and check number.
Seems to be they're routed through a bank itself, probably where the insurance company has an account.
Article says:
The “checks” that Cindy Lohman wrote, the ones rejected by retailers, were actually drafts, or IOUs, issued by Prudential. Even though the “checks” had the name of JPMorgan Chase & Co. on them, Lohman’s funds weren’t in that bank; they were held by Prudential.
Before a check could clear, Prudential would have to send money to JPMorgan, bank spokesman John Murray says.
It also says:
As time went on, she says, she tried to use one of the “checks” to buy a bed, and the salesman rejected it. That happened again this year, she says, when she went to a Target store to purchase a camera on Armed Forces Day, May 15.
So after the first time it was rejected she apparently didn't bother to figure out why.
I just want to address the bolded part. So, whoever wrote the artice doesn't seem to understand that checks are also an IOU. Like, what does he think a check is? I also highly doubt that whoever he talked to at Chase was giving information specifially about their account with the insurace company. That would be a horrible breach of privacy. I want to know what that entire conversation was. Like, yes, prdential would have to have money in the account at chase before the checks would clear. That doesn't mean the money isn't already there. Chase can't divulge predential's account balances just because some reporter called.
Aioua on
life's a game that you're bound to lose / like using a hammer to pound in screws
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
SIEGEL: I have a picture of just such a checkbook here that I've seen. And it says — it looks like a check. It's drawn on Prudential's Alliance account. It's payable through JPMorgan Chase Bank. You tried drawing a check on this account?
LOHMAN: Yes, I did later. I went to a retail store. I attempted to purchase a mattress, of all things. And I was told that they couldn't accept the check because it couldn't be verified. I was really confused because it was JPMorgan Chase. The second time that I attempted to use the check was at Target this last May, and the exact same thing happened. They could not verify that check.
Huh? She found out that there was something wrong with the checks, did nothing for a year, and then found out the same thing was wrong with the checks.
If this woman is the person that has been injured the most from this policy, it aint nothing to rage about.
This is the best. She knew something was wrong, but apparently didn't bother to even try and figure it out. She went with the "lets see if the problem works itself out" strategy instead.
The insurance company retained ownership of the money? Where?
How else could it have collected the interest? I can't give you a check and then go the bank you deposited the money in and ask for the interest.
The same way that bank accounts, trusts, escrow, etc. works? Just because someone has possession of something doesn't mean they have ownership of it. Otherwise that self storage place owns all my stuff!
Bank accounts work the same way all loans work: you lend them the money, and they do with it as they wish. The storage company only owns the space where you keep the items. If it worked like you seem to think it does, they could rent your stuff out like a bank account lends out money.
Actually, the whole thing is like a storage place renting out the items a customer leaves with them. She gave them permission to transfer the money to an account, not to borrow her money.
Scalfin, it is quite telling that for the past X pages you have not been able to muster up any outrage about the actual news story and have had to invent strained anaologies to get your dander up instead.
Scalfin, I'm going to break my rule about not responding to anything you say and point out that maybe you should take a vacation from the forum for a bit if this is getting to you that bad.
Scalfin, I'm going to break my rule about not responding to anything you say and point out that maybe you should take a vacation from the forum for a bit if this is getting to you that bad.
Are you upset that the facts on the ground say you're full of shit?
Scalfin, it is quite telling that for the past X pages you have not been able to muster up any outrage about the actual news story and have had to invent strained anaologies to get your dander up instead.
I find it telling that you can't seem to be able to come up with a reason why my analogies don't work and are claiming storage services are just like bank accounts.
This is more relevant to the immigration thread, but if you want to go check out the facts on the ground in Nevada, Expedia is offering some great deals on Vegas flights for that vacation I recommended. You might be able to avoid giving yourself a heart attack over stuff on the internet as well.
This is more relevant to the immigration thread, but if you want to go check out the facts on the ground in Nevada, Expedia is offering some great deals on Vegas flights for that vacation I recommended. You might be able to avoid giving yourself a heart attack over stuff on the internet as well.
Now, back to how we were.
I take it that you'd have concluded that Mexicans cause blizzards if you'd gone to Mexico City last christmass.
So, I work for a credit union.
I just want to clarify, re: checks/drafts. They're the same thing. Two different words for the same thing.
There's a thing called a 'demand draft' which is where a merchant generates a document that looks exactly like a check, except it just doesn't have your signatue (they just pinky-swear you authorized it), and then they send that document though the normal check system. There's also 'bank drafts' which are the same thing as 'cashier's checks'. At my CU, in all our documentation checks are refered to as drafts. Though its called a checking account.
And the image? That's a plain old check, drawn on an account at Chase.
Now, I bet it's probably some kind of line of credit there, not a checking account, and they bill the insurace company at the end of each month, but still. They're just checks.
As for why they got returned, there's 1000 reasons other than just insuffiend funds. Since they don't say way, we can't gleam any information from that.
Yeah, looking at the checks from the insurance company they look pretty legit to me. They look like they got the important fields and they would have a bank account number and routing number on them. Those things should just go though the normal check clearing system.
There may be some limitations on those drafts imposed by the insurance company or some other regulations that we aren't being told about, but otherwise they seem like they should work for the most part normally as checks. For example, with some brokerage accounts you can get a checkbook and write checks on your idle funds, but mine says that you can't write checks for too small of a value (they don't want you paying for groceries and such on that account).
Which gets into the problem with the article not explaining why the checks were not honored. Did the merchants just not like how they looked and refused to accept them, or was there some other problem?
Edit: Looking through the NPR article it does look like they are some similar limitations on MetLife's version of the checks on that account as those if I got checks through my brokerage account. It's outlined in their materials. It says that the checks must be for at least $250.
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Mr_Rose83 Blue Ridge Protects the HolyRegistered Userregular
edited August 2010
Hang on, came to the thread late; let me see if I've got this right:
Policy X is taken out on person Y with beneficiary Z; we don't yet know who took out the policy but then we don't necessarily care either.
Anyway; Person Y dies, policy X matures and the insurance company C tells the beneficiary Z. What C told Z is what's at stake here, yes?
Specifically, when C said "we've put this money in an account you can draw from, here are some cheques" were they being deceptive by not stating* that the account was not in Z's name, despite never having asked Z for any of the normal information that setting up a bank account requires, nor giving Z an account number and holding branch or any other information about the account than the chequebook?
And further, were they also deceptive when they described the account as interest bearing but neglected to inform* Z that Z was not getting all of the interest bearing on the account?
Also there is an issue where one or more sales clerks, for one or more companies, independently refused to accept one of the cheques supplied by C for reasons unknown but possibly due to being unfamiliar with the company, format, bank name, or other details of the cheques.
Is that all about right?
EDIT: Oh, wait, forgot; apparently it was also not made clear* that neither the account nor the individual sum was not covered by federal banking insurance, which, apparently, it could not possibly have been anyway due to legal technicalities.
*Other than in "the fine print" which, apparently, normal people shouldn't be expected to read or understand.
I still don't get how the beneficiary was "fucked over". The money was available to her all the time. Are all banks that don't offer the highest interest rates on their accounts "fucking over" their customers. Are all forms investment that don't match the highest return for their amount of risk "fucking over" their investors?
Is New York "fucking me over" for not returning my $0.05 deposit on beverage containers when I use the city's contracted recycling provider instead of taking it back to a supermarket?
Edit: Slightly more relevant: Is any bank that accepts my deposit greater than $250,000 "fucking me over" for not telling me to use multiple accounts, so that all my money is FDIC insured instead of only some of it?
I dug out my life insurance checks. Different company (MetLife) but same sort of deal as the OP story.
The checkbook clearly states that there is a $250 minimum. This is also written on each check under the ____ Dollars line. The example check is made out to "ABC Store," so they clearly intend you to be able to use them at stores.
It specifies that the account will return "money market interest rates," which are set weekly, and guarantees a minimum of 1.5% (For reference, last year I put some extra cash I had into a 9 month CD at the exact same interest rate). None of this is in fine print, in fact there is no fine print in any of the documents they gave me.
They don't mention what they plan to do with my money in the meantime, no surprise there.
Turns out I had shuffled this stuff into some random box last time I moved. Had a small panic when I couldn't find it, so something good came of this thread after all. Also, I never filled out the beneficiary form.
I might use one of these checks to pay off the last of my student loans, actually. Probably should have done that a long time ago.
The fact that the insurer earns 4.8% on its general account is irrelevant. Insurers, like all financial companies, have a various kinds of liabilities. Some are long term -- for example, something like 10-year CD. The company knows it isn't going to have to fork over that money any time soon, so they can put that money into longer term and less liquid investments, which give them a higher rate of return. Other liabilities -- like checking accounts -- are short term. The funds can be withdrawn at any moment, which forces the company to invest the money in high quality, highly liquid assets, which these days can have a return that's barely distinguishable from zero. The average result of all those different investments is the 4.8%, but the investments backing the checking account are probably giving much less than that. One would hope that the return on those assets was more than 1%, though.
And although the FDIC doesn't apply here, there are state-based life insurance guarantee programs. I'd be surprised if they didn't apply here. (Plus the solvency regulations for life insurers are a fair bit stronger than those for banks.)
The fact that the insurer earns 4.8% on its general account is irrelevant. Insurers, like all financial companies, have a various kinds of liabilities. Some are long term -- for example, something like 10-year CD. The company knows it isn't going to have to fork over that money any time soon, so they can put that money into longer term and less liquid investments, which give them a higher rate of return. Other liabilities -- like checking accounts -- are short term. The funds can be withdrawn at any moment, which forces the company to invest the money in high quality, highly liquid assets, which these days can have a return that's barely distinguishable from zero. The average result of all those different investments is the 4.8%, but the investments backing the checking account are probably giving much less than that. One would hope that the return on those assets was more than 1%, though.
And although the FDIC doesn't apply here, there are state-based life insurance guarantee programs. I'd be surprised if they didn't apply here. (Plus the solvency regulations for life insurers are a fair bit stronger than those for banks.)
Yeah, I was talking about this with my father (who has worked in banking for most of his adult life), and it seems like the main worry from the standpoint of the customer with benefits still in these accounts would be the insurance company going under, but even in that case it seems very unlikely that they would be wiped out. Even though this isn't covered by FDIC, states do set up funds to try to cover for the insurance company going bankrupt, and the people who haven't fully redeemed their benefits would very likely be at the front or near the front of the line of the debtors in bankruptcy proceedings over the remains of the company if it has to be liquidated.
It's basically about a step riskier than a money market account, since instead of providing short term cash and debt to a variety of companies in the financial markets, you are only dealing with the short term funding of the insurance company, as it is held in their general account. The closest money market accounts have gotten to losing money recently was in the financial meltdown and the collapse of Lehman Brothers, as at least one of the big money market funds still had debt with them that went sound. Even then the talk and worry about "breaking the buck" was about losing any money in money market funds, not them getting mostly or completely wiped out. (As an aside, the consequences of that would have been worse than just the account holders losing a bit of money, as there was risk of systematic failure of the financial system and runs)
In any case, these people seem like they would likely be prime beneficiaries of government intervention or bailouts in the event that the insurance company did go under.
I don't see what the problem is. Life insurance companies by their very existence make their money on human misery its not like their charities. And this way is a lot less bad then there usual "lets get a lawyer to find a legal loophole to avoid paying" way of making money.
Scalfin, I'm going to break my rule about not responding to anything you say and point out that maybe you should take a vacation from the forum for a bit if this is getting to you that bad.
Are you upset that the facts on the ground say you're full of shit?
Scalfin, I'm going to break my rule about not responding to anything you say and point out that maybe you should take a vacation from the forum for a bit if this is getting to you that bad.
Are you upset that the facts on the ground say you're full of shit?
Posts
They placed the money in the account under their name, which is how they were able to collect most of the interest from that account.
I just want to clarify, re: checks/drafts. They're the same thing. Two different words for the same thing.
There's a thing called a 'demand draft' which is where a merchant generates a document that looks exactly like a check, except it just doesn't have your signatue (they just pinky-swear you authorized it), and then they send that document though the normal check system. There's also 'bank drafts' which are the same thing as 'cashier's checks'. At my CU, in all our documentation checks are refered to as drafts. Though its called a checking account.
And the image? That's a plain old check, drawn on an account at Chase.
Now, I bet it's probably some kind of line of credit there, not a checking account, and they bill the insurace company at the end of each month, but still. They're just checks.
As for why they got returned, there's 1000 reasons other than just insuffiend funds. Since they don't say way, we can't gleam any information from that.
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
The same way that bank accounts, trusts, escrow, etc. works? Just because someone has possession of something doesn't mean they have ownership of it. Otherwise that self storage place owns all my stuff!
I just want to address the bolded part. So, whoever wrote the artice doesn't seem to understand that checks are also an IOU. Like, what does he think a check is? I also highly doubt that whoever he talked to at Chase was giving information specifially about their account with the insurace company. That would be a horrible breach of privacy. I want to know what that entire conversation was. Like, yes, prdential would have to have money in the account at chase before the checks would clear. That doesn't mean the money isn't already there. Chase can't divulge predential's account balances just because some reporter called.
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
No, but you can continue to collect interest on that money until I actually cash it.
Bank accounts work the same way all loans work: you lend them the money, and they do with it as they wish. The storage company only owns the space where you keep the items. If it worked like you seem to think it does, they could rent your stuff out like a bank account lends out money.
Actually, the whole thing is like a storage place renting out the items a customer leaves with them. She gave them permission to transfer the money to an account, not to borrow her money.
Are you upset that the facts on the ground say you're full of shit?
I find it telling that you can't seem to be able to come up with a reason why my analogies don't work and are claiming storage services are just like bank accounts.
Now, back to how we were.
I take it that you'd have concluded that Mexicans cause blizzards if you'd gone to Mexico City last christmass.
Yeah, looking at the checks from the insurance company they look pretty legit to me. They look like they got the important fields and they would have a bank account number and routing number on them. Those things should just go though the normal check clearing system.
There may be some limitations on those drafts imposed by the insurance company or some other regulations that we aren't being told about, but otherwise they seem like they should work for the most part normally as checks. For example, with some brokerage accounts you can get a checkbook and write checks on your idle funds, but mine says that you can't write checks for too small of a value (they don't want you paying for groceries and such on that account).
Which gets into the problem with the article not explaining why the checks were not honored. Did the merchants just not like how they looked and refused to accept them, or was there some other problem?
Edit: Looking through the NPR article it does look like they are some similar limitations on MetLife's version of the checks on that account as those if I got checks through my brokerage account. It's outlined in their materials. It says that the checks must be for at least $250.
Policy X is taken out on person Y with beneficiary Z; we don't yet know who took out the policy but then we don't necessarily care either.
Anyway; Person Y dies, policy X matures and the insurance company C tells the beneficiary Z. What C told Z is what's at stake here, yes?
Specifically, when C said "we've put this money in an account you can draw from, here are some cheques" were they being deceptive by not stating* that the account was not in Z's name, despite never having asked Z for any of the normal information that setting up a bank account requires, nor giving Z an account number and holding branch or any other information about the account than the chequebook?
And further, were they also deceptive when they described the account as interest bearing but neglected to inform* Z that Z was not getting all of the interest bearing on the account?
Also there is an issue where one or more sales clerks, for one or more companies, independently refused to accept one of the cheques supplied by C for reasons unknown but possibly due to being unfamiliar with the company, format, bank name, or other details of the cheques.
Is that all about right?
EDIT: Oh, wait, forgot; apparently it was also not made clear* that neither the account nor the individual sum was not covered by federal banking insurance, which, apparently, it could not possibly have been anyway due to legal technicalities.
*Other than in "the fine print" which, apparently, normal people shouldn't be expected to read or understand.
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Is New York "fucking me over" for not returning my $0.05 deposit on beverage containers when I use the city's contracted recycling provider instead of taking it back to a supermarket?
Edit: Slightly more relevant: Is any bank that accepts my deposit greater than $250,000 "fucking me over" for not telling me to use multiple accounts, so that all my money is FDIC insured instead of only some of it?
The checkbook clearly states that there is a $250 minimum. This is also written on each check under the ____ Dollars line. The example check is made out to "ABC Store," so they clearly intend you to be able to use them at stores.
It specifies that the account will return "money market interest rates," which are set weekly, and guarantees a minimum of 1.5% (For reference, last year I put some extra cash I had into a 9 month CD at the exact same interest rate). None of this is in fine print, in fact there is no fine print in any of the documents they gave me.
They don't mention what they plan to do with my money in the meantime, no surprise there.
Turns out I had shuffled this stuff into some random box last time I moved. Had a small panic when I couldn't find it, so something good came of this thread after all. Also, I never filled out the beneficiary form.
I might use one of these checks to pay off the last of my student loans, actually. Probably should have done that a long time ago.
And although the FDIC doesn't apply here, there are state-based life insurance guarantee programs. I'd be surprised if they didn't apply here. (Plus the solvency regulations for life insurers are a fair bit stronger than those for banks.)
Yeah, I was talking about this with my father (who has worked in banking for most of his adult life), and it seems like the main worry from the standpoint of the customer with benefits still in these accounts would be the insurance company going under, but even in that case it seems very unlikely that they would be wiped out. Even though this isn't covered by FDIC, states do set up funds to try to cover for the insurance company going bankrupt, and the people who haven't fully redeemed their benefits would very likely be at the front or near the front of the line of the debtors in bankruptcy proceedings over the remains of the company if it has to be liquidated.
It's basically about a step riskier than a money market account, since instead of providing short term cash and debt to a variety of companies in the financial markets, you are only dealing with the short term funding of the insurance company, as it is held in their general account. The closest money market accounts have gotten to losing money recently was in the financial meltdown and the collapse of Lehman Brothers, as at least one of the big money market funds still had debt with them that went sound. Even then the talk and worry about "breaking the buck" was about losing any money in money market funds, not them getting mostly or completely wiped out. (As an aside, the consequences of that would have been worse than just the account holders losing a bit of money, as there was risk of systematic failure of the financial system and runs)
In any case, these people seem like they would likely be prime beneficiaries of government intervention or bailouts in the event that the insurance company did go under.
I, uh, refuted your facts rather easily.
Also if you could stay civil that'd be ace.
That was a reference to the immigration forum, where legionforce keeps making stuff up and referring to his fantasies as "the facts on the ground."