Paying Insurance Proceeds with a
"Checkbook" Instead of a Check

Benefits of
Retained Asset Accounts

Retained Asset Accounts were intended by their inventor to assure that EVERY beneficiary would be better off being paid through the Retained Asset Account than if he or she received a lump sum check.

The Retained Asset Account also was intended to preserve beneficiaries’ choices until the beneficiary felt he or she was in a position to make a longer-term financial decision on how to handle or invest the money. Ever since insurance companies stopped paying claims in cash and began issuing lump sum checks over a hundred years ago, beneficiaries had been deprived of choice. The companies simply sent out a large, lump-sum check or draft. The insurance company's check often went un-cashed for weeks or longer. A significant number of grieving beneficiaries regarded cashing the insurance company check as "profiting from the death" of their family member. The life insurance companies made money from the "float" while on uncashed checks beneficiaries kept in a drawer. The beneficiaries lost interest on the proceeds while the insurance company earned interest on the proceeds.

This page outlines some of the considerations that originally went into creation of Retained Asset Accounts and the benefits Retained Asset Accounts were intended to provide.

·       Retained Asset Accounts were intended to provide beneficiaries with immediate access to their insurance proceeds, simply by writing out a check or draft for any or all of the funds. In contrast, the traditional large single check or draft that insurance companies used to issue took weeks to clear after being deposited in the beneficiary's bank account. Beneficiaries did not have access to the money that they often desperately needed. Paying via a Retained Asset Account gave beneficiaries more effective and even faster access to their money, enabling them to immediately pay bills with a Retained Asset Account check or draft. They could not do that with the old "single lump sum check" method.

·       Retained Asset Accounts were designed to pay beneficiaries continuous interest from the moment the claim is approved, until the last dollar is withdrawn. With the single lump sum check or draft, interest was not paid and the bank or insurance company benefitted from the "float" on the check or draft.

·       Retained Asset Accounts as originally designed guaranteed that they would pay beneficiaries interest rates that are consistently equal to or higher than the average rates paid by banks and money market mutual funds on similar accounts, and also provided a floor below which the rates could not fall, even if bank and money market rates were lower (as they have been in 2009 and 2010).

·       Retained Asset Accounts were originally designed to be fully guaranteed by the very same life insurance company that issued the original life insurance policy or annuity contract and paid the claim. The inventor of the concept designed his firm’s Retained Asset Accounts to also give beneficiaries additional protection from the appropriate State Life Insurance Guarantee Association. Guarantee Associations exist in all 50 states and the District of Columbia. For decades many State Life Insurance Guarantee Associations have been providing protection to $300,000 to $500,000 -- far higher than the former $100,000 FDIC limit (which was only increased to $250,000 in late 2008). Notwithstanding the financial strength of any particular insurer, and the backing of any guarantee fund or federal agency, the old adage that one should not keep all his or her eggs in one basket still applies.

·       Retained Asset Accounts were intended to assure that each and every beneficiary would be better off than if he or she had received a single check and deposited it in a bank or brokerage account by treating the funds as if they were they property of the beneficiary.

·       Retained Asset Accounts were designed to provide beneficiaries with monthly statements of their balances.

Retained Asset Accounts were designed and intended by their inventor to benefit BOTH the consumers who receive the insurance benefits and the insurance companies who pay them out and maintain the accounts, at no charge, to the consumers.

Over 25 years of actual experience, paying millions of beneficiaries several hundred billions of dollars in benefits through such Retained Asset Accounts has borne out the initial research and demonstrated that use of Retained Asset Accounts to pay benefits is far better method of paying a claim than issuing a lump sum check or draft would be.

Some insurance companies do not play fair and may have acted improperly and in bad faith with respect to their use of Retained Asset Accounts. Attorneys at Advocate Law Group P.C. and its network have recovered money for beneficiaries from insurance companies who abused beneficiaries and acted in bad faith.

If you or a family member has been significantly harmed by an insurance company, whether through its improper dealings with you through a Retained Asset Account or otherwise, contact an Advocate Law Group attorney toll free at 888-ITS LEGAL. A confidential initial consultation on insurance matters is free, and Advocate and its attorneys often handle cases on a contingency fee basis, with no upfront costs to a client, and payment coming only from the money we recover for our clients.

Contact Us