CHEATING THE TROOPS

Most of America’s active-duty troops pay $16.25 a month for $250,000 worth of life insurance, under a program developed by the Pentagon. That’s a neat bargain, and a break for our soldiers and sailors who face possible death in Iraq or elsewhere and want financial protection for their families.

And yet, with the support of some military commanders and some members of Congress, hundreds of insurance salesmen are pressuring these service people to buy policies that cost as much as $100 a month for life insurance with death benefits of as little as $40,000.

This scam has been going on for more than 30 years, according to The New York Times. The newspaper last week published its findings after a six-month investigation. The story began with a single case, that of Army Specialist Nicholas Stachler, who reported for basic training at the age of 19 at Fort Benning, Ga., before being shipped out for 11 months in Iraq. After six weeks of combat drills, he found himself in a compulsory classroom briefing on personal finance that was really a life insurance sales pitch.

He wound up signing on for pay deductions of $100 a month for around $40,000 in death benefits and some savings that were largely eaten up by the premiums and commissions. He didn’t know what he had bought until his mother asked about the pay deductions.

His case is far from unique. A 1999 Pentagon investigation found many cases of “misleading sales presentations by unauthorized personnel to captive audiences, soliciting during duty hours and soliciting in the barracks” – all prohibited by Pentagon regulations.

Another inquiry, by retired Brig. Gen. Thomas R. Cuthbert, named individual insurance agents and companies and urged the Pentagon to ban agents from the bases or enforce its own rules better. Higher-ups told another Pentagon investigating group that banning insurance agents from bases was “not an option.”

Part of the problem is the Pentagon’s decentralization of responsibility, leaving such matters to base commanders. Insurance companies also have hired retired officers and persuaded some base commanders to vouch for their products. Young service people are trained to follow orders, and many have had little experience in handling financial affairs.

Nothing much came of the investigations until The Times published its articles. Then things started happening. Rep. Michael G. Oxley, an Ohio Republican who heads the House Financial Services committee, said a hearing would be held soon after Labor Day. Appearing on a CNBC show, he said, “They put their lives on the line. A lot of these people have young families that they are trying to take care of on a relatively small military salary. So it’s very unfortunate that they are being taken advantage of.”

On the Senate side, Sen. Susan Collins, a member of the Senate Armed Services Committee, urged the Pentagon to alert the troops that it has not endorsed “these questionable financial products.” She and Sen. Hillary Rodham Clinton, D-N.Y., both called attention to an obscure provision in the pending Defense Department Appropriations bill that would tie the hands of the Pentagon for a year in tightening its rules on the admission of insurance agents to military bases. Sen. Clinton says she will try to eliminate the provision when the bill comes up for final vote.

The Times has done well to bring this scandal to public attention. Now it is up to Congress to break the grip of the insurance lobby on some of the lawmakers and protect the troops from being exploited as a captive market for overpriced insurance and substandard investments.