Marines warned to avoid 'predatory' insurance sales
By FRED ZIMMERMAN | STARS AND STRIPES Published: April 17, 2006
CAMP FOSTER, Okinawa — Buyer beware.
That’s the message Marine Corps Community Services is putting out to servicemembers and their families as it warns about what it calls “predatory” insurance sales practices on the island.
Officials say what they’ve seen mostly are agents selling expensive life insurance policies to young troops, mostly E-1s to E-5s, who can’t afford them. Most of the sellers, according to Bert Corn, director of the MCCS Personal Services Center, are former or retired military members.
“They wrap themselves [in] the flag and approach young troops in the barracks or maybe go door-to-door,” said Corn, who added that telemarketing sometimes also is used. All these forms of sales tactics are against Marine Corps regulations, he said.
In a recent mass e-mail put out on Marine camps, MCCS officials stated: “Department of Defense Directive 1344.7 strictly prohibits any form of commercial solicitation unless specific guidelines are met, including approval by the local installation commander. No door-to-door, mass briefing, or barracks solicitation by commercial agents is authorized.”
Corn said when agents talk to troops, they typically drop names of senior enlisted personnel who they may have once worked with to establish common ground and build trust. He also said the names of the insurance companies often sound very patriotic.
While servicemembers aren’t necessarily being scammed — they are buying actual whole life insurance policies — Corn said they are getting in over their heads.
“We’ve seen people getting charged $120 a month for this stuff, and these kids can’t afford it,” he said.
Typical cases MCCS has seen have been a $33,000 whole-life policy for that $120 a month, which costs four to five times more than a term insurance policy that would pay out much more, according to Anthony Green, an MCCS financial specialist.
Term life insurance is “pure insurance,” with the face value of the policy paid to the beneficiary after the death of the insured, Green said. Whole life insurance is a term policy with an investment component, and is much more expensive.
Corn said many agents use pressure techniques to sell the policies and typically try to close the deal within 24 hours. Green added that many times agents will use service in Iraq and Afghanistan as a scare tactic, and stress that a young servicemember needs to take care of his or her family.
In addition to affecting bank accounts, Corn said, the pricey policies also affect unit readiness. He said many times servicemembers either are embarrassed they were conned into something they can’t afford or are afraid they’ll get into trouble for having financial hardships.
Both Corn and Green said when in doubt if something is a good deal, talk to someone — either a senior leader or a financial specialist with MCCS.
What to do before you buy
Marine Corps Community Services recommends following these tips before buying life insurance:
- Ask for a blank copy of the policy contract to research and assess. If the agent won’t provide a copy, don’t buy the policy.
- Wait at least 14 days before signing any contract. This gives you ample time to research and assess.
- The U.S. government is not affiliated with, nor does it endorse, any commercial life insurance company.
- Contact your unit CFS (command financial specialist) or an MCCS financial specialist at your Personal Services Center for advice or more information on buying life insurance.
Free financial education forum
A free financial education forum is scheduled to be held from 12:30-4:30 p.m. Tuesday at the Globe and Anchor Club, Building 460, on Camp Foster.
The forum, being presented by the MCCS Personal Services Center and the NASD Investor Education Foundation, is open to all active-duty servicemembers, military retirees, Department of Defense civilians and family members. Topics to be covered include where to get advice on saving and investing, how NASD protects and educates investors, how to avoid the predatory loan trap, mutual funds, 529 plans and more.