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. They take this step 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, they can close out their account by writing a check to a bank, brokerage firm, or other financial institution. However, investigations have found that some life insurance companies abuse retained asset accounts. They fail to issue a checkbook and hold the cash in the account as long as possible to earn interest.
In 2010, the New York Attorney General and other state attorney generals initiated an investigation into leading life insurance companies over their alleged abuse of retained asset accounts. They accused insurance companies of failing to make beneficiary payments and failing to send unclaimed life insurance money to their state’s unclaimed property fund.
Abuse claims involving retained asset accounts seem to be the most egregious against life insurance beneficiaries.
Those abuses include:
- Not paying 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 pocket 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 do not know 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. The longer the cash remains in the retained asset account, the more the life insurance company will profit.
- Failing to 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 insurers use the retained asset account as a way to pitch additional services to beneficiaries.
- Improperly handling legitimate claims that someone illegally withdrew money from a retained asset account.
About the Life Insurance Lawyers
Our life insurance lawyers win justice for individuals and families who face a life insurance claim denial. They understanding that life insurance companies aim to deny insurance claims. Life Insurance Law utilizes our knowledge and legal tools to fight and win cases expediently and effectively. 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.
