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Safeguards Protect SGLI Beneficiaries

By Staff Sgt. Kathleen T. Rhem, USA
American Forces Press Service

PHILADELPHIA, Nov. 10, 1999 – Department of Veterans Affairs officials constantly review their contracts and install safeguards to ensure beneficiaries of the Servicemembers' Group Life Insurance program get the best possible benefits.

"Things always change," said Greg Hosmer, senior attorney for the VA Insurance Service. "There are changes in the insurance industry, changes in the law, and changes in what we want for our beneficiaries."

Hosmer said Prudential Insurance Co., which runs the SGLI and the Veterans Group Life Insurance programs for the VA, has held the contract for 34 years. Recently Prudential, in coordination with VA and DoD, arranged for free financial counseling for beneficiaries. Before they gave final approval, however, VA and DoD insisted on several safeguards to protect beneficiaries from being pressured to buy unnecessary or unwanted products or services.

Ernst and Young, the firm providing the counseling, is prohibited from "making sales and pushing their products," Hosmer said. The company is among the nation's largest accounting and counseling firms.

"They're strictly prohibited by the terms of the agreement from trying to sell any products of theirs whatsoever to the survivors," said Tom Tower, DoD's assistant director for retired pay and survivor benefits. "If we hear they're selling products, that'll be the end of that contract."

The service, which began in October, is strictly voluntary. Prudential sends a letter telling eligible individuals about the service and directing them to contact Ernst and Young if interested. Hosmer said Ernst and Young does not contact beneficiaries.

"That's one of the things we'll be checking up on," Tower said. "We want to know if there was pressure to take the service." He said individuals also can pass feedback through their service's casualty assistance officer.

As an additional safeguard, the VA will survey beneficiaries, asking what they thought of the counseling service or why they chose not to use it, Hosmer said.

When considering new programs, Hosmer said, the VA's overriding concern is whether the benefit outweighs any potential harm. "In this case, we think it does," he said. "We're offering free financial advice from a reputable company, rather than someone coming off the street and saying, 'Hey, I heard you just got $200,000. How about letting me take care of that for you?'"

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