Information
/etc/login.defs sets system-wide account defaults. Its UMASK value is the umask baseline that pam_umask applies to a login session before any shell-initialization file runs, and that useradd uses when creating a home directory. It governs the umask for sessions that do not source the interactive shell-initialization files.
If the /etc/login.defs UMASK is missing or less restrictive than 0027, sessions that never run the shell-initialization files -- and files created during account setup -- receive permissions readable or writable by other users. A restrictive baseline here ensures a safe default even where shell-level umask settings do not apply.
Solution
Edit /etc/login.defs and set the UMASK line to 0027 or more restrictive:
UMASK 027