On July 29, 2010 a lawsuit was filed in federal court in Springfield, Massachusetts by the families of American servicemen killed in action against Prudential Insurance Company of America for its handling of their loved ones’ death benefits.
An amended version of the suit will be filed on Monday, August 30, 2010 with additional plaintiffs attached and an allegation of fraud against the company for purportedly putting the money due military families into personal, interest-bearing “Alliance Account.”
The plaintiffs charge that instead, Prudential held the money in its general accounts, earning as much as 5 to 6 percent interest while the Alliance Accounts were used only when families sought to draw benefits. These accounts earned 0.5 to 1.5 percent interest.
It is estimated that over the past 11 years, Prudential has earned half a billion dollars off the practice. Although the amount per military family may not be large, the general consensus is that Prudential has been profiting from the deaths of American servicemen.
One of the plaintiffs, Vickie Castro, quoted in a New York Times story by Dan Frosch on August 30, said, “That they would dishonor my son, who died serving his country, that Prudential would use his insurance policy to make a higher profit — it can’t be true, but it is.”
Citing the practice as an industry standard, Prudential had no comment on the pending lawsuit, but has vigorously defended its handling of military life insurance policies over the past month.