Some Life Insurance Companies Abuse “Retained Asset Accounts”
In some cases, instead of denying a life insurance claim outright, some life insurance companies hold a claimant’s cash in a retained asset account instead of making a full payout to the beneficiaries of the deceased account holder. A retained asset account is an account which earns interest for the insurance company and supposedly for the beneficiary. Technically, a beneficiary who receives a checkbook, can write checks to pay for expenses related to the death of their loved one or close out their account by writing a check to a bank, brokerage firm or other financial institution. However, investigations launched in several states have found that some life insurance companies are abusing retained asset accounts by failing to issue a checkbook and holding the cash in the account as long as possible to earn interest.
In 2010 the New York Attorney General along with other state attorney generals initiated an investigation into leading life insurance companies over their alleged abuse of retained asset accounts. Insurance companies such were accused of failing to make beneficiary payments and failing to send unclaimed life insurance money to their state’s unclaimed property fund.
But the abuse claims involving retained asset accounts seem to be the most egregious against life insurance beneficiaries. Those abuses include:
- Failing to pay the life insurance beneficiary fair interest rates. When a life insurance company deposits a beneficiary’s cash into a retained asset account, that cash earns interest. Some life insurance companies are pocketing an unfair amount of interest while the beneficiary receives very little.
- Failing to explain the retained asset account’s terms and conditions to the beneficiary. Many beneficiaries don’t understand that they have a right to remove all the cash from the account once they receive the life insurance payout. This lack of understanding benefits the life insurance company because the longer the cash remains in the retained asset account the more the life insurance company will profit.
- Failing too deliver a checkbook to the beneficiary or having an agent hand deliver it in an attempt to sell the beneficiary on other services. Many life insurance companies are using the retained asset account as a way to pitch additional services to beneficiaries.
- Failing to properly handle legitimate claims by beneficiaries that money has been illegally withdrawn from their retained asset account.
The life insurance lawyers at Life Insurance Law are committed to winning justice for individuals and families who have experienced a life insurance claim denial. Understanding that the primary objective of life insurance companies is to deny insurance claims, Life Insurance Law is prepared to utilize all of our knowledge and legal tools to fight and win your case in the most expedient and effective manner possible. We are also committed to winning the largest payout for you and loved ones. If you are experiencing a life insurance claim denial contact us today.