WASHINGTON BUREAU — The highest ranking Republican on the Senate Banking, Housing and Urban Affairs Committee wants the panel to hold a hearing on retained asset accounts.
The Republican, Sen. Richard Shelby, R-Ala., says he wants the panel to examine the practices of the U.S. Department of Veterans Affairs and insurance companies in paying life insurance benefits to families of fallen military personnel.
Shelby says he has asked his staff to investigate the issue pending the hearing.
“Recent press reports have raised concerns about the manner in which family members of fallen service members receive life insurance benefits under the Department of Veterans Affairs’ Service Members Group Life Insurance program,” Shelby says in his letter. “Most seriously, the reports have suggested that life insurance companies may not be fairly handling the proceeds of these life insurance policies.”
Shelby says the banking panel “should hold a hearing to examine these reports and determine if any unfair practices exist.”
The request was made in a letter to Sen. Christopher Dodd, D-Conn., chairman of the committee.
RAAs are accounts life insurers use to hold beneficiaries’ benefits until the beneficiaries withdraw the cash using checks, payment cards or other means.
Critics say life insurers earn high returns on the cash and pay beneficiaries low rates without giving the beneficiaries adequate notice that the cash is held in something other than a bank account insured by the Federal Deposit Insurance Corp. (FDIC).
Supporters say RAAs give grieving beneficiaries a chance to deal with their emotions before addressing financial concerns, and that funds guaranteed by an insurer may be safer than bank deposits insured by the FDIC.