Company Accused Of Ripping Off Calif. Soldiers

SACRAMENTO (CBS13) -- An insurance company was hit with a stiff penalty after being accused of taking advantage of California military servicemembers.

The California Department of Insurance said San Mateo-based Trans World Assurance offered military personnel life insurance policies which deducted money straight out of their paychecks each month.

To sweeten the deal, Trans World threw in a high return savings account where servicemembers could put away money with a good interest rate, according to state officials.

The state said 321 people from California signed on, but some were surprised to find out some of the money they saved was gone.

Trans World paid itself with their money, which is illegal, officials said.

"Don't use deceptive, predatory or otherwise underhanded practices when selling insurance to any consumer, let alone someone who is serving their country abroad and putting their life on the line day in and day out," said Department of Insurance press secretary Dave Althausen.

The state said Trans World has agreed to pay back servicemembers with interest and settled with the state for $275,000 to avoid losing their license.

Trans World representatives did not answer CBS13s phone call for comment Monday afternoon.