WASHINGTON (Bloomberg) — Representative Debbie Halvorson wants Congress to set new rules for life insurance companies that profit from accounts that hold death benefits from policies of dead US soldiers and veterans.

The first-term Illinois Democrat introduced legislation on July 30 that would require companies such as Prudential Financial Inc. to tell beneficiaries how their money will be invested and how much the insurer stands to make from holding the funds.

Her legislation follows the start of a probe by the US Department of Veterans Affairs into what has become a common industry practice. Officials at the Pentagon and the White House have said they'll support that investigation.

Bloomberg Markets magazine reported on July 28 that life insurance companies keep money in their own accounts, instead of paying a lump sum directly to survivors when a policy holder dies. The insurers pay uncompetitive interest rates and offer misleading guarantees about the safety of accounts that aren't federally insured.

"Hearing about this, I was just outraged," Halvorson said in a telephone interview yesterday. "It's corporate greed."

Her bill requires the Veterans Affairs Department to enforce the new rules and says the agency should make an annual report to Congress to ensure that insurance companies "are being responsive to military families."

Prudential, the second-largest US life insurer, is the sole provider of life insurance coverage to six million US military personnel and veterans.

Prudential spokesman Bob DeFillippo said the Newark, New Jersey-based company is "working with the VA to address concerns raised about the programme."