People get screwed over by fine print all the time, in arguably more heinous circumstances. The world already doesn't work in a manner that grants universal respect for the dead, so it's hard to feel morally outraged at this and not also feel super morally outraged all the time about way worse stuff. Relatively, it's not a very good poster child for evil, and if anyone gets fired or whatever over this, unless someone somehow finds it's illegal, it will be a PR schtick rather than justice served, and we all know it.
Paladin on
Marty: The future, it's where you're going? Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
The only way I see anyone getting screwed here is if the bank doesn't have sufficient funds to cash out all the settlements they're holding in the event of a "run" on the company, perhaps spurred by this type of publicity.
Except from what the article describes the money is in fact there. It is just in a special account to earn the company 4.8% interest, as opposed to sitting in an account doing nothing marked Accounts Payable.
If I give you a check for 100 dollars, and you take a year to cash it, does the interest I earn belong to you or me?
It's earning 4.8% percent interest because the bank the company put it with has loaned it out to earn even greater-than-4.8% returns.
If the bank has a run, the company goes bankrupt - and then it can't pay the recipients, either, because company accounts aren't protected by federal insurance.
So the money isn't "actually there", to nitpick. I agree that it is an odd thing to get outraged, over, though. Federal insurance doesn't really count as being "actually there", either, if you think about it.
Except from what the article describes the money is in fact there. It is just in a special account to earn the company 4.8% interest, as opposed to sitting in an account doing nothing marked Accounts Payable.
If I give you a check for 100 dollars, and you take a year to cash it, does the interest I earn belong to you or me?
Right, I was speaking counter-factually, giving a situation where outrage might be justified. As far as anyone knows that is not the case currently (but it could happen with, say, insufficient regulation).
Wait so we are concerned that if the bank has the run, and the insurance company has a run, then overnight our entire financial system will collapse and we will descend into a Max maxian dystopia but people will be forced to steal their scratch built cars because the bank collapse will prevent us from buying them?
<gravelly hero voice> Sorry punk, gun stores don't take checks.
I dunno, I'm not outraged in the slightest, and I actually have money in one of these. Maybe it's time to get it out (but 1% is more than my bank will give me, way more actually).
Any time you give a company (or the government) money, they are making money off it (which is why the comparison to gift cards was apt). The lady in the article didn't know this? Hard to believe that anyone could be so naive.
So are we supposed to be outraged that you are profiting from grief? Are we supposed to shun you until you take it out and put it in a checking account for .01% interest?
I think that's pretty much the issue. Life insurance necessarily delves into emotional issues. Then the article tosses in the "think of the soldiers" for extra appeal to emotion. It's not really rational.
There are moral hazards associated with life insurance (it was outlawed back in the day, even), but this is not one. I think AH even started a thread about such an issue once.
Businesses have really no incentive to be moral. Ethical, maybe.
Paladin on
Marty: The future, it's where you're going? Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
I don't see how the lady was 'fucked over', but the insurance company should've been more transparent. It's obvious that the customer was not comfortable with the insurer pocketing the interest money, and since it's her settlement, she should've been informed in clear writing (and/or verbally) what was being done with the money while it was being held by the insurer. It seems that if she had known that they'd be making money from the interest, she'd have immediately taken the sum and put it elsewhere (and that's her choice, 'cuz it's her money).
I'm not seeing how it's unethical, in other words, but I do see why the customer would be upset.
Businesses have really no incentive to be moral. Ethical, maybe.
That's not what moral hazard means.
oh I didn't read your post
at all
was wondering where hazard came from
Paladin on
Marty: The future, it's where you're going? Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
It seems that if she had known that they'd be making money from the interest, she'd have immediately taken the sum and put it elsewhere (and that's her choice, 'cuz it's her money).
I'm not seeing how it's unethical, in other words, but I do see why the customer would be upset.
People are often outraged when they discover the consequences of their actions, in this case it strikes me as "How dare they make more money than I was off of my grief". If you cannot be bothered to read the information provided, refuse to ask questions, and instead make baseless assumptions from a position of ignorance that later turn out to be false what other than moral outrage is left to you?
Imagine a life-insurance world that did have instant cash payouts. "Your son just died in a war of choice! Here's Four-Hundreded-THOUSAND DOLLARS!!!" ...It could be delivered by a game show host.
---
I actually think that leaving the money in an account and waiting for the bereaved to come to a decision is the sensitive way to handle this.
Anyways, yea. I hate small print, that's the outrage I personally have.
Did Lohman actually sign anything giving them permission to make interest off her money? Otherwise "We'll stick it in an account and take 3/4ths of the interest it gains" seems pretty damn presumptuous to me.
It seems that if she had known that they'd be making money from the interest, she'd have immediately taken the sum and put it elsewhere (and that's her choice, 'cuz it's her money).
I'm not seeing how it's unethical, in other words, but I do see why the customer would be upset.
People are often outraged when they discover the consequences of their actions, in this case it strikes me as "How dare they make more money than I was off of my grief". If you cannot be bothered to read the information provided, refuse to ask questions, and instead make baseless assumptions from a position of ignorance that later turn out to be false what other than moral outrage is left to you?
How do you handle the morality of proxy contracting? In most cases, we don't pick our own life insurance plans. Much like health insurance, it's a work thing. In this case, the company who contracted out to the entire federal government had these clauses.
Moreover, in the case of life insurance: the person who signed the contract is deceased. My mother is my beneficiary still (I'm not married), and I can assure you she has never read my life insurance contract.
We all seem to be operating under the idea that life insurance is something you take out on someone else in order to profit from their deaths, when as far as I've seen in the US it's something you take out via work on yourself, and someone else winds up with money later.
Did Lohman actually sign anything giving them permission to make interest off her money? Otherwise "We'll stick it in an account and take 3/4ths of the interest it gains" seems pretty damn presumptuous to me.
It wasn't her money until the serviceman died. At which point she could access all of it immidiately. If she didn't want them earning interest she could've withdrew all the money and thrown it down a well. Or whatever, it's her money.
As long as the insurance company pays the balance of the policy I see no moral problem with them making money on it with your consent. They have not tried to withhold payment, they merely offer payment in a manner convenient to them. 1% interest is rather generous on a checking account, but rather poor for an investment. However most investments leave you unable to touch the money.
Perhaps you may consider obtaining a copy of your life insurance policy, reading through it, and going over it with your mother along with her options.
Having no life insurance my next of kin have nevertheless been made aware of my wishes for the disposition of my material wealth, as well as my preferences on organ donation and quality of life issues.
Man, people like to argue about everything these days. They didn't fuck over anyone. Get over yourselves.
LeCaustic on
Your sig is too tall. -Thanatos
0
AtomikaLive fast and get fucked or whateverRegistered Userregular
edited August 2010
Can't we just limit starting Concern Trolling threads to just one a week? I'm really getting tired of answering the ol' "when did you stop beating your wife?" chestnut.
The package arrived at Cindy Lohman’s home in Great Mills, Maryland, just two weeks after she learned that her son, Ryan, a 24-year-old Army sergeant, had been killed by a bomb in Afghanistan. It was a thick, 9-inch-by- 12-inch envelope from Prudential Financial Inc., which handles life insurance for the Department of Veterans Affairs.
Inside was a letter from Prudential about Ryan’s $400,000 policy. And there was something else, which looked like a checkbook. The letter told Lohman that the full amount of her payout would be placed in a convenient interest-bearing account, allowing her time to decide how to use the benefit.
“You can hold the money in the account for safekeeping for as long as you like,” the letter said. In tiny print, in a disclaimer that Lohman says she didn’t notice, Prudential disclosed that what it called its Alliance Account was not guaranteed by the Federal Deposit Insurance Corp., Bloomberg Markets magazine reports in its September issue.
Lohman, a public health nurse who helps special-needs children, says she had always believed that her son’s life insurance funds were in a bank insured by the FDIC. That money -- like $28 billion in 1 million death-benefit accounts managed by insurers -- wasn’t actually sitting in a bank.
It was being held in Prudential’s general corporate account, earning investment income for the insurer. Prudential paid survivors like Lohman 1 percent interest in 2008 on their Alliance Accounts, while it earned a 4.8 percent return on its corporate funds, according to regulatory filings.
“I’m shocked,” says Lohman, breaking into tears as she learns how the Alliance Account works. “It’s a betrayal. It saddens me as an American that a company would stoop so low as to make a profit on the death of a soldier. Is there anything lower than that?”
Millions of bereaved Americans have unwittingly been placed in the same position by their insurance companies. The practice of issuing what they call “checkbooks” to survivors, instead of paying them lump sums, extends well beyond the military.
Yeah, this is pretty fucking ghoulish. Not to mention potentially illegal, as they are acting as a bank without the proper authorization. And of course, the funds aren't protected by FDIC, so if the insurer goes belly up, well...you're pretty much fucked.
This is if you are even able to get decent life insurance. Not nearly as awful as trying to get DI, but still it's a fucking nightmare.
So, do you guys think that she would have chosen to keep her money with them if they had explained what was going of completely and clearly?
Im not convinced that it wasn't explained completely. If it wasn't clear enough for her she could have even taken the papers to a retail bank and they would have been more than happy to help her set up a proper investment account.
You can't write checks for a new sofa on a 5 year CD, though.
That's true. But a 5 year CD has a minimum of a 5,000-10,000 deposit depending where you get it from. So, even half of her money could be tossed in one, then write checks for the other half.
Going through 200,000 is insane unless you're unemployed. If you're employed, jesus. You could toss it all in CDs.
bowen on
not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
You can't write checks for a new sofa on a 5 year CD, though.
You can't write checks with this either, because they aren't real checks. They are more like withdrawal requests that you make to the insurance company.
HamHamJ on
While racing light mechs, your Urbanmech comes in second place, but only because it ran out of ammo.
Posts
Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
If I give you a check for 100 dollars, and you take a year to cash it, does the interest I earn belong to you or me?
If the bank has a run, the company goes bankrupt - and then it can't pay the recipients, either, because company accounts aren't protected by federal insurance.
So the money isn't "actually there", to nitpick. I agree that it is an odd thing to get outraged, over, though. Federal insurance doesn't really count as being "actually there", either, if you think about it.
Right, I was speaking counter-factually, giving a situation where outrage might be justified. As far as anyone knows that is not the case currently (but it could happen with, say, insufficient regulation).
<gravelly hero voice> Sorry punk, gun stores don't take checks.
I look forward to embracing our financial doom.
Any time you give a company (or the government) money, they are making money off it (which is why the comparison to gift cards was apt). The lady in the article didn't know this? Hard to believe that anyone could be so naive.
There are moral hazards associated with life insurance (it was outlawed back in the day, even), but this is not one. I think AH even started a thread about such an issue once.
Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
I'm not seeing how it's unethical, in other words, but I do see why the customer would be upset.
oh I didn't read your post
at all
was wondering where hazard came from
Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
People are often outraged when they discover the consequences of their actions, in this case it strikes me as "How dare they make more money than I was off of my grief". If you cannot be bothered to read the information provided, refuse to ask questions, and instead make baseless assumptions from a position of ignorance that later turn out to be false what other than moral outrage is left to you?
Imagine a life-insurance world that did have instant cash payouts. "Your son just died in a war of choice! Here's Four-Hundreded-THOUSAND DOLLARS!!!" ...It could be delivered by a game show host.
---
I actually think that leaving the money in an account and waiting for the bereaved to come to a decision is the sensitive way to handle this.
Anyways, yea. I hate small print, that's the outrage I personally have.
How do you handle the morality of proxy contracting? In most cases, we don't pick our own life insurance plans. Much like health insurance, it's a work thing. In this case, the company who contracted out to the entire federal government had these clauses.
Moreover, in the case of life insurance: the person who signed the contract is deceased. My mother is my beneficiary still (I'm not married), and I can assure you she has never read my life insurance contract.
We all seem to be operating under the idea that life insurance is something you take out on someone else in order to profit from their deaths, when as far as I've seen in the US it's something you take out via work on yourself, and someone else winds up with money later.
It wasn't her money until the serviceman died. At which point she could access all of it immidiately. If she didn't want them earning interest she could've withdrew all the money and thrown it down a well. Or whatever, it's her money.
Perhaps you may consider obtaining a copy of your life insurance policy, reading through it, and going over it with your mother along with her options.
Having no life insurance my next of kin have nevertheless been made aware of my wishes for the disposition of my material wealth, as well as my preferences on organ donation and quality of life issues.
Using "You didn't say no" as your definition of consent is retarded.
If I order and pay for a washing machine from a store, the washing machine just sits there until I pick it up or get a delivery guy to deliver it.
If I receive an inheritance from an uncle's estate, it stays wherever he left it until I actively procure it in some way.
The problem is that they told her that they were keeping it in a high yield account for her to mislead her into leaving it with them.
That's not true. They told her it'd yeild 1% interest. Which it does for her.
1% is high-yield in 2010.
Not really, no. Any real bank could get you something better.
Not really, no, and if you had any idea of interest and CD rates at the moment, you'd know that.
Google "High-Yield Rates" and "CD Rates" to see what banks are paying.
Yup. Im sorry for her loss, but this woman is either not that bright, or not very interested in her finances.
$400,000 is a lot of fucking money to keep in what she believed to be a checking account.
I can't imagine someone going through 400,000 in less than that unless they were fucking insane, anyways.
This is if you are even able to get decent life insurance. Not nearly as awful as trying to get DI, but still it's a fucking nightmare.
Im not convinced that it wasn't explained completely. If it wasn't clear enough for her she could have even taken the papers to a retail bank and they would have been more than happy to help her set up a proper investment account.
But you can get it with a high interest rate credit card!:winky:
That's true. But a 5 year CD has a minimum of a 5,000-10,000 deposit depending where you get it from. So, even half of her money could be tossed in one, then write checks for the other half.
Going through 200,000 is insane unless you're unemployed. If you're employed, jesus. You could toss it all in CDs.
You can't write checks with this either, because they aren't real checks. They are more like withdrawal requests that you make to the insurance company.