Comparable bills pending before both the House and Senate would require contractor insurance companies to change the way they handle the Servicemembers Group Life Insurance (SGLI) and Veterans Group Life Insurance (VGLI) policies they underwrite. The Senate bill would make the Department of Veterans Affairs (VA) and Office of Personnel Management (OPM) tell insurers to offer lump-sum payouts of government-sponsored death benefits to beneficiaries of service members and federal workers as defaults, rather than options. The measure would end contractor insurance companies’ practice of offering so-called "retained asset accounts," under which the companies collect as much as 4 percent interest on money intended for beneficiaries, and hold it in corporate accounts. The money, as such, is earning interest for the companies rather than beneficiaries, says Sen. Charles E. Schumer, D-N.Y., sponsor of the bill. "It’s deeply troubling that insurance companies would promote these accounts as if they were run-of-the-mill checking accounts, yet the insurance companies profit from the interest and provide no FDIC guarantee that the money itself is insured," Schumer said. The House bill, H.R. 5993, would require the VA to make contractor insurance companies provide full counseling and disclosure regarding insurance benefits to families of fallen service members. "This legislation will ensure these policies are transparent and life insurance companies are held accountable," said Rep. Debbie Halvorson, D-Ill., who sponsored the measure.
