A recent report from the Pentagon found life insurance salespeople are continuing to sell unsuitable policies to U.S. military personnel despite a law to protect troops from such practices being passed five years ago.
The report found that insurance agents used misleading marketing tactics to persuade some military personnel into buying life insurance policies they could not afford. And while the agents misused the Defense Department myPAY internal payment system for many of the transactions, military personnel failed to enforce policies in place to limit solicitation to troops, CNN reported.
A number of military members continue to sign up for expensive insurance policies despite the fact that they are automatically enrolled in a life insurance policy through the Veterans Administration on their first day of training.
"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 pointed out.
It is important that soldiers, and all American consumers, understand what life insurance options are available to them so they do not pay more than they can afford for unnecessary coverage. Investopedia reported that many policyholders do not realize that loans can be taken out on life insurance policies if someone needs immediate cash for things such as paying taxes or saving for college. These cash value loans are tax free, and interest is paid back to the policy not a lender.