Life insurance for troops in Iraq nixed
Army Pfc. Marlin Rockhold, a cheerful, soft-spoken 23-year-old, knew he was going to war. Four months before he deployed to Kuwait in January 2003, he had the foresight to sign up for nearly $300,000 in supplemental life insurance to augment his regular government death benefit. He didn't want his wife and young child to be left without resources should he be killed.
On September 23, 2002, Rockhold applied for $272,000 in commercial life insurance from an agent who visited his home near Fort Stewart, Ga. The Rockholds figured they could rest easier knowing the policy would supplement the $250,000 benefit afforded by the Defense Department's life insurance program. But after just three days, Rockhold canceled his new policy, apparently under orders from a noncommissioned officer at Fort Stewart.
Four months later, Rockhold deployed to the Middle East with the Army's 3rd Infantry Division. On the morning of May 8, 2003, a sniper's bullet struck Rockhold in the back of the head, killing him as he directed traffic on a Baghdad bridge. He was the first soldier to die in action following the end of major combat operations in Iraq.
Following Rockhold's death, his widow received $125,000 in life insurance benefits from her husband's government policy; the balance was awarded to his mother, who was a secondary beneficiary.
Unemployed and left on her own to raise a 9-year-old daughter, DaVonna Rockhold is one of a growing number of confused and increasingly angry military family members questioning the Pentagon's role in guiding the personal financial decisions of its lower-ranking enlisted men and women. And, frustrated by indifference from her husband's superiors, she is one of several who are planning to pursue legal action against the government.
"Who are they to tell these soldiers that they can't take out extra life insurance, especially for these people who have children?" she asked, from her home in Hinesville, Ga. "I have one child, but what about the families that have four or five kids?"
Rockhold worries that her husband wasn't alone in succumbing to pressure from his military chain of command when making critical decisions about personal financial matters. Private insurance companies assert that officers and senior enlisted leaders at installations across the country regularly discourage subordinates from augmenting their government life insurance. The Defense Department counters that such intervention is necessary to protect young and financially unsophisticated troops from the aggressive marketing tactics and deceptive sales practices used by some solicitors.
But shielding junior enlisted personnel from what some officers and senior enlisted leaders perceive as crooked insurance scams may soon be unnecessary. Under current law, the Defense Department regulates the time, manner, and place in which insurance companies and agents, among other financial services providers, may solicit products on military bases. But that could change when the department publishes a new rule that could prohibit private insurance companies from peddling their products on military installations altogether.
Defense Department officials say the new regulation would not prevent honest companies from doing business on military bases. However, the department "must take prudent steps to protect military members from prohibited and dishonest sales practices" on base, a Pentagon official said in a March 31 statement, adding that Congress will be given 90 days' notice before publication of the proposed rule change in the Federal Register, and again before final revision of the rule.
Insurance-company executives say the rule change is unnecessary, anti-competitive, and driven by military banks and credit unions looking to exclude competition in the insurance market. They note that the proposal targets financial services providers while omitting a host of other private-sector solicitors, such as auto dealers, which they say routinely exploit young service members.
Last August, the Pentagon held its first open meeting on the proposed rule change. According to a transcript of the meeting in Arlington, Va., of the 48 speakers present, only six supported the rule change. Of these six, four represented military banks, credit unions, or their respective associations (the Navy Federal Credit Union, and the Association of Military Banks of America, for example).
The issue has sparked the attention of top lawmakers, including Rep. Michael Oxley, R-Ohio, who chairs the House Financial Services Committee. In January, Oxley wrote to Defense Secretary Donald Rumsfeld, questioning the legal basis for the proposed rule change. Others, including Rep. Ellen Tauscher, D-Calif., a member of the House Armed Services Committee, assert that the proposed rule change is unnecessary, and that competition for the sale of insurance products and financial services must be preserved.
In addition, House Government Reform Committee Chairman Tom Davis, R-Va., and House Armed Services Committee Chairman Duncan Hunter, R-Calif., called for a Government Accounting Office investigation into allegations that the Army is failing to process hundreds of supplemental life insurance policies purchased by personnel deployed to Iraq and Afghanistan. The GAO was directed to focus its attention on Fort Bragg, N.C., and Fort Lewis, Wash., where the bulk of the delays have reportedly occurred. Many of the servicemen and -women involved were unaware when they were deployed that their supplemental insurance was not in force, the chairmen assert.
But military leaders defend the role of their staffs in providing financial advice to lower-ranking personnel. Last year, Army Maj. Gen. David Petraeus responded to a complaint from an insurance agency director near Fort Campbell, Ky., stating in a January 30, 2003, letter, "Many of my soldiers are young and lack financial planning expertise and experience."
Insurance-industry sources agree that many enlisted personnel fall into financial hardship because of low pay, poor budgeting, and temptations to live beyond their means. But the sources assert that financial products like supplemental life insurance are not solely to blame. Most monthly supplemental life insurance payments run in the neighborhood of $60 for the type of policy sought by Marlin Rockhold.
Petraeus, a former economics professor at the United States Military Academy, noted that he was keenly aware of the importance that life insurance plays in a sound financial plan. "However," he wrote, "I also believe that the level of insurance established by Congress with Servicemembers' Group Life Insurance (SGLI) is adequate for the vast majority of my soldiers." Petraeus, who recently returned from Iraq, commands Fort Campbell and the 101st Airborne Division.
Ultimately, Petraeus wrote, soldiers must make financial decisions for themselves, though he noted that Congress specifically directs Army leaders to provide general information about life insurance and its role in financial planning. But the extent to which the military may influence a service member's decision -- including issuing direct orders to cancel monthly insurance policy allotments -- is unclear.
Richard Worsham, regional marketing director for American Fidelity Life Insurance and the Military Benefit Association, accuses the Pentagon of "playing insurance god" with the financial future of its enlisted men and women. Two years ago, Worsham's life insurance products came under attack in a June 2002 article by Betty Geren, Fort Campbell's consumer-affairs director, in the Fort Campbell Courier. Geren's office had previously urged soldiers to avoid dealing with American Fidelity agencies, and the article stated that her office had received numerous complaints regarding products and sales practices of area life insurance agents, including those with American Fidelity. But the insurance group fought back, defending its record in a July 10 letter to Geren, and the company later received an apology from Fort Campbell's director of community affairs.
But the Pentagon, backed by two studies critical of current solicitation rules, asserts that insurance agents often abuse their rights and take advantage of service members. In a December 18, 2003, letter to Rep. Tauscher and her colleagues, David Chu, the undersecretary of Defense for personnel and readiness, asserted that some agents submit soldiers' allotment forms directly to a base's finance office, sometimes even forging signatures on the forms so the payments are deducted from a soldier's paycheck.
The Defense Department says it provides qualified personnel and facilities for individual counseling on loans and consumer credit transactions. Military members are encouraged to seek advice from a legal assistance officer or their own lawyer before making a substantial loan or credit commitment. In addition, installation commanders are required to make disinterested third-party counseling available to personnel who request it.
In the meantime, DaVonna Rockhold, who used all of her government benefit award to establish a trust fund for her daughter and to pay off car loans and other debts, will be building her case against the Defense Department.
"It seems like a lot, but when you have all these bills in front of you, bills that were acquired from when we first got together, it's really not a lot of money," she said. "Once you establish savings and pay off your debt, there is just nothing left."
Rockhold said she is hopeful that other families who have experienced similar tragedies will join her. "If all the families pooled together, I think it would be a little more feasible in terms of legal action," she said. "It's not the money; it's the principle. It's the point that they ordered him not to get the extra insurance."