NAIFA Blog

As any life insurance agent knows, retained-asset accounts have been a fixture in the industry for decades. The insurance companies originally came up with the accounts (in which settlement funds remain with the company, bearing interest for the beneficiary, until the beneficiary is ready to use them) at the request of consumers. They provide a flexible way for grieving loved ones to receive their benefits at a time when finances might not be foremost in their minds. Beneficiaries always have access to their total account balances and can cash out the accounts at any time.

Retained asset accounts recently came under fire after an NPR report based on a Bloomberg.com article claimed that because of these accounts “[m]illions of Americans are being duped by life insurance companies.” On its face, the charge is very misleading. However, the report unintentionally shows how important insurance advisors are to their clients.

NPR and Bloomberg.com highlight the story of the mother of a soldier killed in Afghanistan who received her son’s death benefit as a retained asset account. Notably, her son’s coverage was through a federal government contract with a company. It is heartbreaking to hear Cindy Lohman talk about the difficulties she had trying to access the account while grieving her fallen son. We can only wonder, however, how her experience might have differed had she been working with a qualified agent rather than a bureaucracy. An agent might have easily and compassionately explained the account to her and helped her allocate her money any way she wished. This is an important part of what agents do every day.

• See this fact sheet about retained asset accounts from the American Council of Life Insurers.
• Read a statement by Jane L. Cline, president of the National Association of Insurance Commissioners, on the retained asset accounts “controversy.”
• Here is an article from the American Thinker examining some of the issues raised by the NPR item and the Bloomberg.com article.