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 – 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.
(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.