Prudential Insurance Co. of America on Monday defended the company’s service members life insurance payout practices, which are the object of a federal lawsuit and at least two investigations.“We are trying to set the record straight and clear up as much misinformation as we can,” said Bob DeFillippo, spokesman for the Newark-based insurer, which has been selling life insurance to U.S. service members for 44 years.

“The notion that we are taking anything away from beneficiaries is completely false,” he said.

A lawsuit filed last month in Springfield, Mass. was brought by parents of services members who died, including Joyce and Kevin Lucey, whose son, former Lance Cpl. Jeffrey Lucey, hanged himself in 2004 after returning home from Iraq.

The lawsuit alleges that Prudential earned more than 5 percent interest on funds it held for beneficiaries, while it paid beneficiaries only about 1 percent.

The plaintiffs are seeking to have the suit certified as a class action on behalf of 60,000 beneficiaries of military life insurance policies. They filed an amended complaint Monday adding fraud claims.

DeFillippo declined to comment on the specifics of the case, but he defended Prudential’s practices.

“The beneficiaries of our fallen service men and women absolutely deserve our sympathy and respect. I am afraid in this controversy that sort of gets lost,” he said. “The people who work on that don’t consider it a business, they consider it a service.”

DeFillippo said beneficiaries have a choice of taking a lump sum death benefit or a payout of monthly installments over three years.

One of the criticisms the suit centers of Prudential’s practices in handling payouts. For those who opt for a lump sum payout the company does not cut a check. It holds onto the money in a general account and gives the beneficiary a check book with which they can withdraw as much of it as they want.

“If the first thing they do is write the check for the entire amount they can take that and do whatever they want with it,” he said. “They can put it in a different financial institution.”

“We invest that money. Some of it has to be available right away. We pay [beneficiaries] half a percentage point, which is comparable to a bank checking account or a money market account,” he said.

“It’s a difficult time in peoples’ lives, and the accounts are a safe place where that money can be kept, where they have full access to it and it earns interest until they decide what else they want to do with it.”

The complaint alleges that in 2005 Kevin Lucey attempted to write a “check” to transfer his money, and Prudential refused to honor the check, because it could not verify his signature.

“It took the intervention of a third party and nearly one month for Mr. Lucey to actually receive his money from Prudential,” the complaint said.

The lawsuit alleges that Prudential failed to pay lump sum benefits as required by law, and pretended to put money in interest-bearing individual accounts when it actually put the money in a general account, using the beneficiaries’ funds to enrich itself, while paying beneficiaries “whatever small interest rate Prudential unilaterally set.”

The money from service members and veterans death benefits represents about 2 percent of a $200 billion general account, and that account earned 4.1 percent in the first half of this year, DeFillippo said.

The plaintiffs seek restitution, disgorgement of “ill-gotten gains,” damages and, “a cessation of Prudential’s abuse of trust.”

Prudential payout practices are also being investigated by the Department of Veteran’s Affairs, and New York state’s attorney general.

“We are cooperating with anybody who is doing an inquiry,” DeFillippo said.