2008 0407 - (DoD) - Commercial Solicitation of Military Personnel on DoD Installations - Inspector General Report (Department of Defense) - Report No. D-2008-075 April 7, 2008 - 47p
2008 0407 - (DoD) - Commercial Solicitation of Military Personnel on DoD Installations - Inspector General Report (Department of Defense) - Report No. D-2008-075 April 7, 2008 - 47p
- (p1) - Congress found that financial services companies offered members of the Armed Forces high-cost securities and life insurance products and engaged in abusive and misleading sales practices.
- Such practices included the mutual fund contractual plan and life insurance products being marketed as investments.
- (p1) - State Government Role and the National Association of Insurance Commissioners.
- (p4) - As a result, junior enlisted Service members are still purchasing high-cost life insurance products that are considered inappropriate and may threaten their financial stability.
- (p9) - Their Marines were being approached off base in the nearby commercial district by a company selling life insurance with a side savings feature. They were being enticed into listening to
the sales approach with the promise of a free pizza or dinner, and then an attempt was made to sell them questionable life insurance. - (p9) - Since the State is the regulatory authority for insurance, problems associated with life insurance should be raised to the State Department of Insurance for action.
- (p15) - B. Inappropriate Life Insurance Solicitations at Naval Station Great Lakes
- (p16) - Commercial Solicitation Problems in 2005 and 2006
- (p18) - When the sailors arrived at the company sales office, they were given a sales presentation to purchase a financial product touted as an investment and life insurance.
- (p18) - We interviewed sailors who stated that they agreed to an allotment amount of $100 only to find later that $250 was actually being taken out of their pay, and some sailors who stated they did not even know what company they were dealing with.
- (p21) - NSGL has contacted the Illinois Division of Insurance for help in obtaining refunds for sailors who bought unnecessary life insurance products and to have the financial planning agency’s practices reviewed.
- (p21) - Conclusion
- There is a history of questionable sales practices and solicitations of inappropriate
financial products being sold to sailors at the NSGL. - GAO issued a report that states junior enlisted Service members have been sold a product that combines life insurance with a savings fund promising high returns.
- Financial regulators were generally unaware of the problematic sales to military members because DoD personnel rarely forwarded Service member complaints to regulators.
- There is a history of questionable sales practices and solicitations of inappropriate
- (p22) - Contributing to this was the lack of consumer awareness training provided to the sailors on unscrupulous practices of insurance companies once basic training was complete.
- The continued inappropriate life insurance sales practices at NSGL by a financial planning agency after numerous reports identifying these problems are unacceptable.
- (p21) - Recommendations, Management Comments and Audit Response
- (p27) - Appendix B. Prohibited Solicitation Practices
- (p28) - NAIC Model Regulation Prohibited Practices
- offering or selling a life insurance product with a side fund to Service members in pay grades E-1 through E-4 who are enrolled in SGLI, for whom the life insurance with the side fund is presumed unsuitable, until a complete needs assessment has been completed and demonstrates that the SGLI death benefit, along with other military benefits, savings and investments, survivor’s income, and other life insurance are insufficient.