I’m a fan of sorts of National Public Radio. They take the time to talk about a lot of topics that regular radio and television really don’t find profitable and I love to catch “All Things Considered” when I’m traveling.

I would completely hypocritical to say something like “NPR can be a bit opinionated” when I’m offering the world according to Ed every day in this forum, but today they stepped over a line that goes beyond opinion and seems to have some genuine agenda.

In an article posted today they assert that life insurance companies profit by sending checkbooks to beneficiaries of policies as opposed to lump sum death benefit checks. They are more pointed in their assertion in regards to Met Life and Prudential and their handling of beneficiary payments of this type to parents and widows of people who die in the military. It’s a real shame on you big rich companies for taking advantage of grieving widows kind of attack.

The nuts and bolts of their complaint is that the widow is sent a checkbook, sometimes payable not by a bank but the company, and that it only pays .5% interest on the balance. They further assert that because the companies are investing this money and making a lot more than .5%, they are profiting from the grieving widow and it isn’t even FDIC insured!

I talked with an associate of mine who actually worked in the claims department of Prudential when the details of SGLI (Servicemen’s Group Life Insurance) was being worked out. Met and Pru were really the big boys that stepped up and agreed to all the terms that the government laid out, which is not to say that it isn’t profitable, but knowing government contracts, it’s probably not much fun to administer either.

One of the requirements the government had back then when the death benefit for soldiers was only $200,000, was that they wanted the widow to get a checkbook versus a large check. It was the government’s thought that there was less likely to be a binge spending spree happen if it was handled this way. As for the money being protected like FDIC, I feel confident that the government probably requires Met and Pru to hold those funds in government backed bonds. I might be wrong but probably not.

One of the other “shame on you” accusations is that they don’t feel like the insurance companies make it clear that you can write yourself a check for the lump sum. Well, excuse me, but everyone out there who doesn’t believe you can write a $400,000 check on your checking account that has $400,000 in it, raise your hand. Ok, assuming there are a few raised hands, would you be inclined to call someone and find out if you could write that check? Me too!

As for the .5% interest, well, that’s more than most savings accounts pay (FDIC insured and invested by the bank with a much higher return). So if you had $400,000 in a savings account, would you move some of it? All of it? What’s the difference?

Bottom line. If Paul was still around you can bet he would be up for telling the rest of the story, and as for NPR, shame on them for not telling it all accurately.

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