In another example of how bottom-line decisions by the banking industry throw the lives of ordinary Americans out of whack, a company that offered a special “life savings insurance” plan to thousands of senior citizens nationwide has simply yanked that policy away.
And the seniors are left holding the bag, getting nothing in return but the original money they put in, decades ago.
The little-known policy was cast into the spotlight this week when a Minneapolis newspaper reported the case of 92-year-old Helen Moosmann, who has maintained a $2,000 balance in her insured account since 1971. She was supposed to receive an additional $2,000, giving her $4,000 to pay for her own funeral expenses.
Now she has been told, forget it. There’s no money after all.
The insurance was offered to credit unions by the CUNA Mutual Group. The “life savings insurance” program was originated in 1938, the height of the Great Depression, as a way to encourage people to save money.
Moosmann’s late husband, a retired Air Force pilot, opened the account for her more than 40 years ago.
"He wanted to make sure I was taken care of,” Moosmann told the Minneapolis Star-Tribune.
Over the years, she said, she had considered withdrawing the money in order to pay for household repairs. But U.S. Federal Credit Union advised her not to. Her total benefit, the credit union told her, would be decreased if she took out money.
By leaving that much-needed $2,000 sitting in the account, she earned the full benefit, which after four decades came to a matching $2,000. Not much in the grand scheme of things, but to Moosmann and her family, who lived a life without many frills, the money meant a lot.
Last week, the credit union called her up and told her, after all this time, just kidding! No additional $2,000 for you.
“I can certainly sympathize with the 92-year-old woman in this situation,” said Phil Tschudy, a CUNA representative. “We felt it was in the best interest of the policyholders going forward, that this was a decision we had to make.”
"We're losing 10 percent of our customer base every year for this product," Tschudy said. "We were down to only 1,200 unions out of 7,000 who still offered it."
The policy always contained fine print, saying that it could be cancelled without notice.
“How can they just change the whole thing?” said Moosmann’s daughter, Sandy Bellim (pictured, with Moosmann). “It’s the same thing as a pension. I understand if they are not going to offer it anymore, but they can’t take that away and say it’s not feasible.”
The “policyholders” are not the seniors themselves, but credit unions. Moosmann’s credit union has about 1,500 holders of the policy who will now lose their benefits. The total number of seniors with accounts at credit unions nationwide is not known, but is likely to be thousands more.
SOURCES: Minneapolis Star-Tribune, ABC News