Bloomberg.com is running a story by David Evans that will appear on the newsstands beginning August 16 in the September issue of Bloomberg Markets magazine.

Admittedly the story has little to do with business insurance.

Rather, the article is about "Alliance Accounts." This is the way Prudential Financial pays out death benefits to beneficiaries of our fallen soldiers. Our readers include insurance professionals, small business people, and financial planners, so I'd like some feedback on this practice.

Prudential Financial handles life insurance for the Department of Veterans Affairs. According to the article, and discussed in Prudential's response, survivors of service men and women are told they'll get a $400,000 life insurance payout. Instead the beneficiaries receive a check book for the Alliance Account. Prudential promises to hold the money in safekeeping for as long as families would like, saying it will pay them 0.5 percent interest.

Where are the benefits held? Prudential's general corporate account according to the article.

Is the Alliance Account FDIC insured? Nope.

Does it work? Not according to Cindy Lohman whose son Ryan was killed in Afghanistan, "she tried to use one of the 'checks' to buy a bed, and the salesman rejected it. That happened again this year, she says, when she went to a Target store to purchase a camera on Armed Forces Day, May 15."

Does Prudential make money? Yep. "It was being held in Prudential's general corporate account, earning investment income for the insurer. Prudential paid survivors like Lohman 1 percent interest in 2008 on their Alliance Accounts, while it earned a 4.8 percent return on its corporate funds, according to regulatory filings."

How much money? "[L]ike $28 billion in 1 million death-benefit accounts managed by insurers."

I did some more digging and came across the 2003 testimony of Thomas Lastowka, Director, Philadelphia VA Regional Office, And Insurance Center Department Of Veterans Affairs, before The House Committee On Veterans' Affairs
Subcommittee On Benefits. His testimony praises Prudential and Mr. Lastowka stated in that testimony:

"In June 1999, SGLI and VGLI beneficiaries began receiving their proceeds through a checking account rather than by the traditional single check for the full amount of the insurance proceeds. This checking account is called an "Alliance Account." The beneficiary receives a checkbook for an interest bearing account from which the beneficiary can write a check for any amount of $250 or more, up to the full amount of the proceeds. Alliance Accounts earn interest at a competitive rate, are guaranteed by Prudential Insurance Company of America."

This begs the question whether the accounts are competitive and "guaranteed." MetLife, another insurer identified in the article, prefaces its "guarantee" as follows: "All guarantees are subject to the financial strength and claims-paying ability of MetLife." Maybe that "guarantee" had more meaning prior to the 2008 collapse and bailout of insurers. Competitive? The article finds, "Prudential paid 0.5 percent interest in July to survivors of government workers and soldiers. That's less than half of the rate available at some banks with accounts insured by the FDIC up to $250,000."

In that same testimony in 2003, Mr. Lastkowa requested that Prudential receive a management fee:

"Since the origin of the program, Prudential and the companies that provide reinsurance have not received a profit for their participation in the program (my emphasis). They have received only reinsurance premiums in return for providing such coverage to the program. In its request for the new management fee, Prudential arrived at the $400,000 amount by analyzing what it would have earned on the SGLI Program had the risk charge been calculated in a manner similar to the risk charges used on other large group life insurance cases. The SGLI Program has been charged substantially less for risk charge than these other clients."

To be fair, Prudential has issued a response stating that the company has "had years where we have made a profit, we have also had years when we had losses because we assume the investment risk for the money in the Alliance Account."

I would be interested in your comments.

Prudential has released a study tracking the financial behavior of women over a ten-year period. What are the trends? What are strengths, changes, and challenges faced by women and expressed in their behaviors? What unique challenges do women face as a part of their financial experience? These are a few of the many questions explored in the report.

The report suggests that 95% of the women surveyed were financial decision makers and 86% of married women were the primary decision makers in their household.

Yet, fewer than two out of ten felt confident in that role and relied on non-experts for advice. Since 2000, insurance products and benefits, such as annuities or long-term care insurance are better understood by these decision makers, but not as well understood as they should be for the primary financial decision makers--according to the survey.

"While the need for a trusted financial partner has never been greater, women are relying on informal personal networks for advice," said Judy Rice, president of Prudential Investments, Prudential's proprietary mutual fund business. "Building a financial plan requires expert assistance, so it is important that financial firms work hard to build trust and do a better job of encouraging women to find the time to establish realistic plans to meet their specific needs."

From the business insurance standpoint, the ability to offer benefits that encourage retention and loyalty assumes the employee understands the value of the benefit to their family. And this knowledge is growing among female professionals: in 2004, 47% acknowledged the importance of workplace retirement plans; today, 72% acknowledge the importance of such a benefit.

Finally, when asked where the primary source of information about financial products came from? 64% said their spouses. And I will assume that 64% of the respondents are not married to financial professionals.

NOAA weather reported that Tropical Storm Bonnie was about 155 miles southeast of Miami at 5 a.m. The storm is expected to pass over the southern tip of Florida and the Florida Keys later today.

The storm will then pass out into the Gulf of Mexico, possibly gaining strength where the storm may delay more work on the cap to the Deepwater Horizon well.

As the storm passed through the Bahamas, no flooding or serious injuries were reported. Winds are reported to be 40 m.p.h. with higher gusts.

Florida's Office of Insurance Regulation has excellent advice for businesses and homeowners when it comes to storms on its website at the One-Stop Hurricane Resource Guide (.pdf format).

Twitter is a great site where people come together to post "tweets" of 140 words or less of things the person considers relevant. Others can "follow" the person and review these pearls of wisdom. For example, if one wanted to "follow" me, they could do so by following lawboop.

Businesses use Twitter as well. Big businesses use the site to announce promotions, specials, new products, while smaller businesses use it to establish an identity or particular expertise.

Insurers and insurance industry leaders also "tweet." The "tweets" can be informative and can identify some business resources. For example, on June 21, The Hartford "tweeted" about driver safety: "Want to learn how you can be a safer driver? Watch our six-part video series." The post provided a link to the video series.

Here are some business insurance Tweeters to follow:

• The Hartford
• Travelers Insurance
• Business Insurance Magazine
• Allstate Insurance
• Farmers Insurance Group

There are many, many more and the site allows you to search for "tweeters" to follow. It is a good way to stay on top of insurance offers and to watch what other "tweeters" have to say about the insurer.