Baucus investigates Prudential Survivor Benefit Accounts

Senate Finance Chairman Max Baucus (D-Mont.) on Thursday announced that he is looking into the tax status of earning by Prudential Financial, Inc. on survival death benefit accounts in its Servicemembers' Group Life Insurance (SGLI) program. 

Recent press reports have indicated that upon the death of a SGLI policy holder, Prudential holds the survivor benefits in its own corporate account, instead of paying the benefits to their rightful owner and not crediting earnings on the funds to the beneficiaries. 

"If Prudential is exploiting the grieving widows and distressed families of fallen soldiers, it certainly may be time to reassess the tax treatment of profits made off this abuse," Baucus said in prepared remarks. "Instead of reaping huge profits off these tragic losses, Prudential should give the families of these fallen soldiers the interest they earned on their money... Life insurance companies should not take advantage of the shock of losing a loved one just to make a quick buck." 

A class action suit filed in July claimed that Prudential collected over $144 million in investment income through the SGLI program in 2009, earning a 5.69 percent return. However, Prudential paid beneficiaries only one percent interest on the income. 

Baucus has requested information about Prudential's handling of the survivor benefit accounts to ensure the tax treatment of Prudential's profits is appropriate and fair.