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Life Insurance Pitch to Marines Violates Instruction 1344.07

A Pentagon audit found that local Marine leadership allowed young enlistees to be ensnared by insurance salesmen.
A Pentagon audit found that local Marine leadership allowed young enlistees to be ensnared by insurance salesmen.

A new audit by the Pentagon’s Office of Inspector General has found that military brass here didn’t do enough to halt illegal life insurance sales practices on San Diego County Marine Corps bases, thereby threatening the “financial stability” of junior enlistees.

“Sales of unsuitable life insurance products sold by insurance agents for two companies continued on or near five of the six military installations we visited,” according to the August 23 report that investigated insurance sales to junior enlisted service members on military bases, both in the United States and Asia. According to the audit, “Certain life insurance products offered to members of the Armed Forces were improperly marketed as investment products, providing minimal death benefits in exchange for excessive premiums that are front-loaded in the first few years, making them inappropriate for most military personnel.”

Sales pitches on base are supposed to be closely regulated to protect service members from unethical agents and bad policies, but auditors discovered that hadn’t happened in the case of 11 leathernecks interviewed at Camp Pendleton. “Before our visit in June 2010, we provided a list of 265 individuals we wanted to interview and have complete questionnaires. The Camp Pendleton Legal Assistance Office was able to locate only 11 of those Marines.… They said their first contact with the insurance agents was during a sales presentation at a personal finance class sponsored by their battalion, from March 2009 through June 2009. The insurance agent’s sales presentation and the base personnel responsible for the presentation’s approval were in violation of [Defense Department] Instruction 1344.07. As a result of our review, the 11 Marines filed complaints through their Legal Assistance Office to the insurance company and obtained a refund for their premiums paid.”

At Marine Corps Air Station Miramar, “A Service member complained that a life insurance agent solicited insurance sales and passed out business cards after a mandatory financial class in September 2009.… The Marine said that the agent contacted him several times, which eventually resulted in his purchase of unsuitable life insurance. He then related his unfavorable experience to a financial counselor, who forwarded the information to the command for investigation, which resulted in Marine Corps officials refusing to renew the agent’s pass. Additionally, the Marine received a refund of premiums paid after he filed a complaint with the insurance company.”

Multiple violations of Pentagon policy and regulations were found during the investigation, including solicitations by insurance agents of Marines and soldiers “in a ‘captive’ audience where attendance is not voluntary”; “soliciting in barracks, day rooms and unit areas”; and “soliciting door to door without an appointment.” Additional prohibited practices uncovered by the auditors included “use of an agent as a participant in [a] Military Service–sponsored education or orientation program” and “using oral or written representations to suggest or give the appearance that the [Defense Department] sponsors or endorses any particular company, its agents, or the goods, services, and commodities it sells.” The report calls for better tracking of state insurance regulatory records of agents and their companies before they are issued base passes. It adds that as a result of the investigation’s findings the Marine Corps has taken “corrective actions” regarding “enforcement of existing commercial solicitation activities and practices on base Camp Pendleton and Marine Corps Camps in Okinawa, Japan.”

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A Pentagon audit found that local Marine leadership allowed young enlistees to be ensnared by insurance salesmen.
A Pentagon audit found that local Marine leadership allowed young enlistees to be ensnared by insurance salesmen.

A new audit by the Pentagon’s Office of Inspector General has found that military brass here didn’t do enough to halt illegal life insurance sales practices on San Diego County Marine Corps bases, thereby threatening the “financial stability” of junior enlistees.

“Sales of unsuitable life insurance products sold by insurance agents for two companies continued on or near five of the six military installations we visited,” according to the August 23 report that investigated insurance sales to junior enlisted service members on military bases, both in the United States and Asia. According to the audit, “Certain life insurance products offered to members of the Armed Forces were improperly marketed as investment products, providing minimal death benefits in exchange for excessive premiums that are front-loaded in the first few years, making them inappropriate for most military personnel.”

Sales pitches on base are supposed to be closely regulated to protect service members from unethical agents and bad policies, but auditors discovered that hadn’t happened in the case of 11 leathernecks interviewed at Camp Pendleton. “Before our visit in June 2010, we provided a list of 265 individuals we wanted to interview and have complete questionnaires. The Camp Pendleton Legal Assistance Office was able to locate only 11 of those Marines.… They said their first contact with the insurance agents was during a sales presentation at a personal finance class sponsored by their battalion, from March 2009 through June 2009. The insurance agent’s sales presentation and the base personnel responsible for the presentation’s approval were in violation of [Defense Department] Instruction 1344.07. As a result of our review, the 11 Marines filed complaints through their Legal Assistance Office to the insurance company and obtained a refund for their premiums paid.”

At Marine Corps Air Station Miramar, “A Service member complained that a life insurance agent solicited insurance sales and passed out business cards after a mandatory financial class in September 2009.… The Marine said that the agent contacted him several times, which eventually resulted in his purchase of unsuitable life insurance. He then related his unfavorable experience to a financial counselor, who forwarded the information to the command for investigation, which resulted in Marine Corps officials refusing to renew the agent’s pass. Additionally, the Marine received a refund of premiums paid after he filed a complaint with the insurance company.”

Multiple violations of Pentagon policy and regulations were found during the investigation, including solicitations by insurance agents of Marines and soldiers “in a ‘captive’ audience where attendance is not voluntary”; “soliciting in barracks, day rooms and unit areas”; and “soliciting door to door without an appointment.” Additional prohibited practices uncovered by the auditors included “use of an agent as a participant in [a] Military Service–sponsored education or orientation program” and “using oral or written representations to suggest or give the appearance that the [Defense Department] sponsors or endorses any particular company, its agents, or the goods, services, and commodities it sells.” The report calls for better tracking of state insurance regulatory records of agents and their companies before they are issued base passes. It adds that as a result of the investigation’s findings the Marine Corps has taken “corrective actions” regarding “enforcement of existing commercial solicitation activities and practices on base Camp Pendleton and Marine Corps Camps in Okinawa, Japan.”

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Comments
2

Junior military personnels do not earn a whole lot, so I think it is unfair that insurance companies sell them high priced products which they do not need. Whether it is buying health insurance or life insurance, you need to do proper homework and shopping around to get the best choice.

Sept. 26, 2012

Umm... wait a minute. We already have one huge problem... these Marines are, supposedly, adults. They're 18, can vote, serve on a jury, and have clearly taken an oath and signed a contract to put their lives on the line for our country. But we already have a problem where they cannot legally get a beer or buy a handgun. WTF??? But now, we're going to also hold their hands over life insurance???

Part of being an adult is making mistakes and learning from them. I have nothing but contempt for an insurance salescreature that would sell overpriced or unnecessary coverage to a soldier or sailor or Marine. But if they're adults, let's not treat them like children, and let them learn on their own. It's one thing to try to protect society in general from "predatory practices", but to single out members of the armed forces and say they're especially unable to make a correct decision here? Can we also "protect" them from bad decisions like buying sports cars and fast motorcycles? Promulgate an order that they can only buy four cylinder, four-door sedans, for their own good?

Anyone is free to refuse to sign up for any given insurance policy.

Sept. 26, 2012

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