Dept. of Defense Issues Warning About Insurance and Investment Scams

The Department of Defense has issued a stern warning regarding insurance and investment schemes that exploit military personnel. Air Force Col. Michael A. Pachuta, who serves as the director of morale, welfare, and recreation policy at DoD, urges caution when approached with the promise of substantial financial gains. He emphasizes the importance of thorough research and comparing investment opportunities before making any commitments.

Last fall, Congress expressed concerns about reports highlighting deceptive insurance and investment sales practices targeting military members at various installations, such as Camp Pendleton, California, and Fort Benning, Georgia. As a result, the DoD has intensified its efforts to enhance oversight and enforce existing policies to shield servicemembers from unscrupulous practices.

New recruits are particularly vulnerable as they may be lured off-base under the guise of attending investment seminars that turn out to be insurance sales pitches. Unfortunately, DoD policies do not extend off installations, necessitating increased financial education efforts during initial training for newly enlisted personnel.

To safeguard against deceptive insurance policies, Col. Pachuta advises servicemembers to review life insurance terms thoroughly, ensuring the absence of combat-exclusion clauses that may limit coverage during military operations. For financial guidance, military personnel are encouraged to seek counseling and advice from base family support centers and legal offices.

A warning sign to watch out for is investment schemes disguised as savings plans with an insurance element. Col. Pachuta recommends servicemembers compare premiums and coverage rates with those offered by the Servicemembers’ Group Life Insurance (SGLI) program before committing to a policy. With 96 percent of servicemembers enrolled in SGLI, and 92 percent opting for full coverage of $250,000, it would fulfill most insurance needs, particularly for those without dependents.

Despite SGLI coverage, many young servicemembers seek investment opportunities, prompting sales pitches that present insurance-laden savings plans unclearly. To address this issue, Col. Pachuta suggests considering the Thrift Savings Plan for savings accumulation due to its tax-deferred nature and advantageous investment options.

In conclusion, servicemembers should remain vigilant against misleading insurance and investment practices targeting military personnel. By conducting thorough research, seeking advice from reliable sources, and comparing options, servicemembers can safeguard their financial well-being and avoid falling victim to exploitative schemes.