When a member of the armed services dies, his or her insurance company will often put the money it owes to family members into a “checkbook” account. That bothers Democratic State Assemblyman Dave Jones, who’s running for Insurance Commissioner.
“In doing so, insurers are able to pocket the difference between the interest rates they pay on these accounts and what they make in investing this money,” said Jones.
Jones calls the practice “outrageous.” That’s why he announced legislation Tuesday that would force insurers to disclose policy details to the families of deceased service members.
But insurance companies argue the practice helps the families. When a loved one dies, financial matters aren’t the first thing they think about. They say checkbook accounts safely store funds until the families are ready.
