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Report: Private firms still selling unsuitable insurance to troops

By Charley Keyes, CNN Senior National Security Producer
  • Pentagon says junior enlisted members not protected
  • Officers don't enforce existing rules, report says
  • Troops solicited to buy policies they don't need, can't afford

Washington (CNN) -- Five years after a law to protect U.S. military personnel from salespeople selling life insurance, a new Pentagon report finds problems continue.

The Inspector General found that insurance agents used prohibited sales practices both on and off U.S. military bases to persuade personnel to buy insurance they may not need or be able to afford. And the report also found that military personnel failed to enforce existing policies that limits solicitation of military personnel. In addition, the report said, companies used misleading marketing techniques and misused the Defense Department myPAY internal payment system.

"Although DoD (Department of Defense) has taken some corrective actions and some States have initiated actions against insurance agents and companies, junior enlisted Service members continue to purchase high-cost life insurance products considered unsuitable for most military personnel and which may threaten their financial stability," the Pentagon Inspector General wrote in a report released Tuesday.

All military personnel are automatically enrolled in a life insurance policy administered by the Veterans Administration from their first day of training or active duty.

The report found that as an example of improper actions by private insurance agents, Marines based in Okinawa were introduced to an insurance agent during a financial class taught by a Defense Department civilian and were later told by a noncommissioned officer to attend a sales solicitation event. Another Marine told Inspector General investigators he was not allowed to leave formation before agreeing to provide contact information to insurance salesmen.

"Insurance agents used prohibited sales practices on bases, and responsible installation personnel failed to comply with solicitation policies," the report said. "Insurance agents and DoD responsible officials must be held accountable for not complying with established controls to mitigate risks associated with the financial welfare of military personnel and their families."

The report said insurance companies also used a letter signed by retired generals and admirals to encourage personnel to buy their policies.

And the report said the Pentagon must play a more active, informed role. "DoD did not have adequate knowledge of agents and companies debarred, banned, or limited from solicitation on and near DoD installations," the report said.